(212) 220-6556 Table of Contents
UBS Group AG has begun liquidating two invoice finance funds at its O’Connor hedge-fund business in Chicago following the bankruptcy of auto-parts manufacturer First Brands Group. The brands filed for bankruptcy, initiating significant legal and financial proceedings that have impacted various financial institutions and funds. The liquidation follows redemption requests from investors concerned about exposure.
The funds were marketed and offered through UBS’s wealth management and broker-dealer channels to private clients, high-net-worth individuals, family offices, and other sophisticated investors meeting income or net worth thresholds.
UBS has stated that “no investment guidelines were breached” and emphasized that “the most affected funds were targeted at sophisticated investors and had clear risk disclosures.” Yet the magnitude of exposure to a single borrower raises questions about how concentration limits and underlying credit risks were explained to investors.
UBS and its O’Connor funds are among the largest creditors in the First Brands Group bankruptcy case, highlighting their substantial exposure and role in the financial fallout. UBS told investors that it expects to “monetize” roughly 70 percent of the affected funds’ net asset value by year-end, implying a recovery of about $0.70 for every $1.00 invested. A $2 million investment would incur a loss of $600,000. The exposure underscores the extent of liabilities and risks faced by investors and financial institutions involved.
The O’Connor funds, including O’Connor’s Working Capital Opportunistic funds, are being liquidated as part of UBS’s response to the financial fallout. Investors in the UBS O’Connor Working Capital Opportunistic Funds may be entitled to recover losses through FINRA arbitration. Our investment loss attorneys at Altamirano PLLC encourage UBS investors to contact the law firm to discuss their recovery options. Investors are strongly advised to seek professional advice before making decisions regarding recovery, as professional advice is crucial in navigating complex financial claims and bankruptcy proceedings.
UBS Exposure to First Brands + Redemption Pressure on UBS O’Connor Working Capital Opportunistic Funds
UBS reportedly faces more than $500 million in total exposure to First Brands Group across its asset-management and investment divisions. The investor exposure appears to be concentrated in the UBS O’Connor business unit in Chicago, which managed invoice finance funds that provided credit to First Brands and related entities.
First Brands Group, LLC, a leading global supplier of aftermarket automotive parts, filed for Chapter 11 bankruptcy protection on September 29, 2025. The case was filed in the United States Bankruptcy Court for the Southern District of Texas.
Private credit providers, including UBS and other financial institutions, played a significant role in supporting First Brands Group prior to bankruptcy. Following the company’s bankruptcy, UBS informed investors that it will wind down O’Connor’s Working Capital Opportunistic Funds, in the first major fund liquidation tied to the collapse. The O’Connor unit is also liquidating a separate “High Grade” fund that invested in invoices linked to less risky companies, though that fund did not have exposure to First Brands. Together, the affected invoice-finance funds reportedly held around $600 million in assets, which included various financial instruments, highlighting the complexity and risk profile of these investments.
The O’Connor Working Capital Finance Opportunistic Funds faced redemption requests after the bankruptcy filing, as investors sought to exit following revelations of direct exposure.
In a statement to the Financial Times, UBS said it was “taking steps to protect clients’ interests and maximize recovery of the remaining First Brands Group-related positions through the complex bankruptcy process.” The bank told investors that most of the funds’ assets are expected to be monetized by year-end.
O’Connor has an unsecured claim for $116.1 million in the First Brands bankruptcy, according to court documents, underscoring the scale of its involvement and the magnitude of potential investor exposure tied to the collapse. UBS emerged as a key player and major creditor in the bankruptcy proceedings.
According to reports, one O’Connor fund had roughly 30 percent of its portfolio tied to First Brands, despite assurances that no more than 20 percent of assets would be allocated to a single position. UBS has claimed that it complied with its own concentration limits because 21.4 percent of that exposure was “indirect,” spread across First Brands’ customers. The level of exposure has angered investors who believed the fund was more diversified.
The scale of the exposure and the resulting investor losses raise serious questions about risk management and concentration oversight within UBS O’Connor.
O’Connor, which is currently being sold by UBS to Cantor Fitzgerald, is also likely to face renegotiation of that transaction as a result of the fund liquidations.
How UBS Marketed the O’Connor Working Capital Opportunistic Funds
UBS has described its O’Connor Working Capital Opportunistic Funds as strategies that invest in accounts receivable and payable programs to “bridge global trade funding gaps.”
O’Connor is part of UBS Asset Management and oversees hedge-fund, private-credit, and commodities strategies. O’Connor structured and managed these invoice finance funds.
The funds were positioned as short-duration credit opportunities intended to provide steady returns through diversified exposure to invoice-finance assets. They were designed with specific investment objectives, such as asset liquidation and risk management, to align with investor priorities and ensure effective fund management.
In practice, investors were told that the funds maintained strict concentration limits and risk controls. UBS told investors that about 70 percent of the funds’ net asset value is expected to be recovered, with full monetization projected by the end of 2025. This represents a significant write-down for investors who relied on UBS advisors and internal due diligence when the products were recommended.
According to SEC filings, a U.S. vehicle associated with O’Connor’s Working Capital Finance strategy, the Nineteen77 Working Capital Finance Opportunistic Fund LLC, was offered to accredited investors under the securities exemption of Rule 506(b) of Regulation D. The Form D filing shows U.S. investors were included under the exemption, confirming that the product was distributed to accredited U.S. clients through UBS Financial Services. The same filing identifies the investment manager as O’Connor, a distinct business unit of UBS Asset Management (Americas) LLC.
These details suggest that the funds were marketed to high-net-worth and family-office investors, investors who may be considered “sophisticated” but still rely on UBS’s representations and supervisory controls.
Another filing for the related Nineteen77 Working Capital Finance Opportunistic Fund Ltd, a Cayman Islands entity, identifies the investment manager as UBS Asset Management (Americas) LLC. That fund reported the minimum investment amount of $100,000 and total amount sold of $124 million.
UBS’s Response to the Crisis
UBS’s response to the crisis surrounding the First Brands Group bankruptcy has been multifaceted, aiming to protect clients’ interests and maximize recovery of the affected funds’ assets. The bank has taken steps to address the exposure of its invoice finance funds to First Brands, including the liquidation of two invoice finance funds managed by its O’Connor hedge fund unit. This decision was made in response to the significant losses incurred by these funds due to their direct exposure to the bankrupt auto-parts supplier.
UBS Hedge Fund Solutions, another key division affected by the crisis, has been working closely with the O’Connor team to manage the risk associated with the First Brands exposure. The bank’s strategy involves a thorough review of its investment guidelines and risk management practices to ensure that they are robust and aligned with the needs of sophisticated investors.
The affected funds, which were marketed to high-net-worth individuals and family offices as part of UBS’s working capital finance opportunistic strategies, had clear risk disclosures in place. However, the scale of the exposure to First Brands has raised questions about concentration risks and the adequacy of risk management practices.
In the context of the broader asset management industry, UBS’s response to the crisis highlights the importance of robust risk management practices, particularly in relation to complex investments such as hedge funds and private credit.
Commonly Asked Question
When does a broker owe a fiduciary duty?
FINRA Arbitration Claims for UBS O’Connor Working Capital Opportunistic Funds Investors
Investors who purchased the O’Connor Working Capital Opportunistic Funds through UBS Financial Services Inc. should contact Altamirano PLLC to discuss filing a FINRA arbitration claim. Altamirano PLLC is reviewing whether investors were adequately informed of concentration risks and the true nature of the underlying credit exposure. The law firm is actively speaking with investors.
Investors who have suffered losses in UBS O’Connor’s Working Capital Opportunistic Funds or related invoice-finance products are encouraged to contact Altamirano PLLC for a confidential consultation. Call (212) 220-6556 to speak with our Principal, Jorge Altamirano, or email [email protected] to schedule a free consultation.
Jorge Altamirano has handled more than 1,500 investor cases, with total claims exceeding $200 million, and has recovered millions for clients nationwide. His practice focuses on helping harmed investors recover losses through FINRA arbitration.
