First Brands Bankruptcy Reveals the Value of Trade Credit Insurance 

When a Customer Fails Overnight 

The First Brands Group bankruptcy in late 2025 blindsided suppliers across the automotive supply chain.
The company reported nearly $10 billion in total debt and listed hundreds of unsecured creditors, many of whom suddenly faced unpaid invoices and uncertain recoveries. 

For these businesses, the problem wasn’t bad credit judgment, it was timing. The collapse came suddenly, with little chance to react. 

How Trade Credit Insurance Could Have Helped 

Trade credit insurance protects companies when a customer fails to pay due to bankruptcy, insolvency, or protracted default.
Had suppliers carried coverage, they could have filed claims immediately after the Chapter 11 filing and recovered up to 90% of the insured invoice value. 

That protection doesn’t stop a bankruptcy- it keeps cash flow intact while courts and creditors negotiate. Instead of waiting years for minimal distributions, insured businesses stay liquid and can keep operating. 

Why First Brands Was the Perfect Case Study 

1. Sudden Default:
   The filing arrived without public warning. There was no gradual decline, no extended restructuring window. Suppliers had no time to reduce exposure. 
2. Broad Impact:
   With hundreds of trade creditors affected, losses rippled across tiers of the supply chain, from raw materials to logistics. Trade credit insurance would have turned those frozen receivables into near-immediate recoveries. 

A Lesson for Every Supplier 

The First Brands bankruptcy isn’t just a cautionary tale, it’s proof that even long-standing customers can collapse without notice.
Trade credit insurance doesn’t eliminate risk; it transfers it, giving companies the liquidity and confidence to keep moving when others stall. 

In a market where corporate debt remains high and bankruptcies are rising, that safety net is no longer optional.

Disclaimer: 

This blog post is meant to be informative and provide helpful tips and insights into credit insurance policies.  It is not meant to supersede any policy requirements.  Please consult your credit insurance policy for all requirements including claim filing deadlines and required documentation. 

Since 2004, Securitas Global Risk Solutions, LLC (“Securitas”) has helped clients develop credit and political risk transfer solutions that provide value on numerous levels. As an independent trade credit and political risk insurance brokerage, Securitas is focused on developing comprehensive solutions that meet the needs of clients, ensuring a complete understanding of policy wording and delivering excellent responsive service.