Private Credit Executives Refute ‘Misinformation’ Surrounding First Brands Collapse

Private equity giants Apollo Global Management, Blackstone, and Ares Management have forcefully denied any exposure to two high-profile U.S. corporate bankruptcies that have recently sent ripples through debt markets and drawn regulatory scrutiny.

Speaking before a British House of Lords committee on Wednesday, executives from the three firms clarified their positions regarding auto parts supplier First Brands and car dealership Tricolor, whose failures have intensified debate about the rapidly expanding private credit industry.

“There has been a lot of misinformation on this credit,” stated Daniel Leiter, a senior managing director at Blackstone, refuting suggestions that private credit providers were significantly involved in either company’s collapse.

Tristram Leach, Apollo’s co-head of European credit, emphasized that First Brands was “predominantly financed” through public market lending—loans typically arranged by traditional banks rather than private credit firms. Supporting this assertion, Blair Jacobson, co-president at Ares, specified that private credit accounted for merely 2% of First Brands’ balance sheet.

Several traditional banking institutions have acknowledged substantial losses from these bankruptcies. U.S. investment bank Jefferies reported exposure to First Brands, while British multinational Barclays revealed last week it had taken a £110 million ($138 million) charge related to Tricolor’s collapse.

Jacobson added that even if Ares had considered backing either company, their investment process “wouldn’t actually get very far” due to fundamental business concerns. He cited First Brands’ cyclical nature and exposure to weakening consumer spending, while Tricolor’s business model relied on what he characterized as a “low-quality customer base.”

The bankruptcies have intensified regulatory interest in the private credit sector, which has grown explosively in recent years as an alternative to traditional bank financing. Assets in private credit have more than doubled since 2015, with the market now estimated at over $1.5 trillion globally according to industry data.

Bank of England Governor Andrew Bailey expressed particular concern last week, announcing plans for a more detailed investigation into these corporate failures. Bailey drew parallels with “the early stages of the global financial crisis” and revealed the central bank’s intention to conduct a “stress test” with private equity and credit industry participants.

This increased scrutiny extends beyond the UK. The European Central Bank and other international financial regulators have signaled their desire to improve visibility into private credit and other segments of the so-called “shadow banking” sector, concerned that systemic risks may be building outside traditional regulatory frameworks.

When questioned about whether the sector’s dramatic growth posed broader financial stability risks, the executives defended private credit as a positive market development. Blackstone’s Leiter argued that private credit is fundamentally safer than bank funding, suggesting it poses less risk of wider financial contagion during periods of market stress.

The debate highlights the evolving landscape of corporate finance, where private credit providers have stepped into the lending void left by banks following the implementation of stricter capital requirements after the 2008 financial crisis. While proponents tout private credit’s flexibility and ability to provide specialized financing solutions, critics worry about potential systemic risks building in less regulated corners of the financial system.

The House of Lords committee hearing represents part of a broader investigation into the rise of private markets and their implications for financial stability, market transparency, and regulatory oversight in an increasingly complex global financial ecosystem.