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ARTICLE · 30 DECEMBER 2025

Lessons From Tricolor And First Brands

Addleshaw Goddard
Addleshaw Goddard
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Addleshaw Goddard

Addleshaw Goddard

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As high-profile failures like Tricolor and First Brands trigger fresh scrutiny of private credit and the wider shadow banking system, Karl Clowry and Jan Gruter...

GlobalFinance and Banking
Karl Clowry
Karl Clowry
Jan Gruter
Jan Gruter

As high-profile failures like Tricolor and First Brands trigger fresh scrutiny of private credit and the wider shadow banking system, Karl Clowry and Jan Gruter assess what they reveal about underwriting standards, fundraising conditions and the looming refinancing wall.

Recent high profile failures appear to be idiosyncratic, but nonetheless serve as a timely reminder that transparency and rigorous underwriting are paramount.

There is a lot of doom and gloom in the financial press right now, and perceived structural weaknesses in private markets are coming under attack.

First, subprime auto lender Tricolor collapsed. Then autoparts supplier First Brands filed for Chapter 11 bankruptcy, after traditional bank loan covenants failed to detect hidden cash commitments, which were structured as off-balance sheet financing. This left lenders that believed they were underwriting debt at roughly 5x leverage, actually underwriting levels that were closer to 20x.

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