Western Alliance filed complaint vs Jefferies, Leucadia

Western Alliance filed complaint vs Jefferies, Leucadia

Western Alliance Bancorp has disclosed potential exposure to the collapse of auto parts supplier First Brands Group through a leveraged facility linked to a fund managed by Jefferies Financial Group Inc. Point Bonita Capital, a division of Jefferies' Leucadia Asset Management, holds approximately $715 million in receivables owed to First Brands, primarily from major retailers such as Walmart Inc. and AutoZone Inc. according to Bloomberg. This represents nearly a quarter of Leucadia's $3 billion trade-finance portfolio. A portion of these receivables is pledged as collateral in a financing arrangement with Western Alliance, raising concerns about potential losses if the assets sour.

Western Alliance stated that its lending facilities with Leucadia are secured by a diverse pool of receivables, not solely tied to First Brands. The bank emphasized it currently sees no material risk of loss from the First Brands bankruptcy but acknowledged ongoing investigations into whether the receivables were improperly pledged multiple times.

Jefferies has separately asserted that its exposure to First Brands is limited and that the firm believes it was defrauded by the auto parts supplier.

The collapse of First Brands, which filed for bankruptcy in late September, has intensified scrutiny of trade-finance practices and triggered broader market volatility. Western Alliance also disclosed a separate fraud-related lawsuit against a borrower, contributing to recent declines in regional bank stocks. Jefferies maintains that its losses from First Brands are "readily absorbable" and that its asset management and investment banking operations remain segregated.