Oaktree Capital Management and Anchorage Capital have purchased stakes in First Brands Group's $1.1bn debtor-in-possession loan. The distressed-debt investors are buying into the financing at reduced prices as First Brands, which supplies auto parts like Fram motor oil, races to secure fresh liquidity. The company has warned it will run out of cash by month's end without additional funding.

First Brands filed for Chapter 11 protection in September and is now negotiating a new loan with existing lenders. It previously sought as much as $800m in fresh capital in December. Any new financing requires approval from two-thirds of current DIP lenders. Discussions are complicated by concerns over advisory fees and efforts to unwind factoring transactions that saddled the business with billions in debt.

A failure to secure new money could force First Brands to shut down parts of its business and sell assets. The company's precarious position highlights the challenges facing legacy suppliers in a shifting automotive landscape. Investors will watch for a resolution that stabilizes operations without triggering a full liquidation.