by Ian Wright
According to Charles Moore, interim chief executive officer of First Brands, "Welcoming three accomplished automotive leaders to the First Brands team marks an important milestone in our transformation and a clear marker of First Brands’ strength." That sounds promising, though some might see it as a PR facade to mask the seriousness of the situation. First Brands is a giant aftermarket parts group deep in a long-running bankruptcy drama.
So deep, in fact, that it recently drafted in some big guns to help, including Tim Turvey, a 37-year veteran of General Motors with his last post being GM Global Vice President of Customer Care & Aftersales.
Drowning In Drama
For a quick recap, First Brands is an automotive aftermarket corporation made up of a bunch of auto parts brands you often see in your local parts store and major department stores like Walmart. A few months ago, it filed for bankruptcy with over $10 billion (yes, billion) in total liabilities. A few weeks later, Patrick James, First Brands Group founder and CEO, stepped down when a US Justice Department probe started, which wasn't a good look for the flailing company.
If that wasn't bad enough, First Brands then sued James, accusing him of misappropriating millions, perhaps billions of dollars. Given this backstory, hiring several veterans of the business all at once could be a sign of strength. But it could also be a sign of panic, an indication of just how monumental a task it will be to turn things around. Either way, there's no denying that Turvey – along with other recent hires Michael Broderick and Crag Barnes – bring a wealth of business experience and positive track records at a time when it's needed most.
Hiring The Big Guns
Michael Broderick specializes in profitable growth and business transformation strategies, and it's likely the transformation bit that First Brands wants. Part of the reason the company is in so much trouble is that it took on a huge amount of debt by buying existing brands. As president, CEO, and board member of the suspension specialists Monro, Broderick is a big deal. But he has also served with Advance Auto Parts, Canadian Tire Corporation, Federal Mogul Corporation, General Parts/CARQUEST, and AutoZone.
Craig Barnes also has growth and transformation in his track record, as well as a curious company called Hollywood Feed, which appears to be an online pet food store. However, he also served with General Parts/CARQUEST, and AutoZone, among other companies.
Desperate Times For The Sprawling Auto Parts Empire
To get an idea of how deep in trouble First Brands is in, it's currently running under a restructuring advisory firm called Alvarez & Marsal while going through bankruptcy court, all while investors panicked at the possibility of a financial disaster from allegedly fraudulent invoices. On top of that, earlier this month it was reported that the company directed vendors buying parts to pay the company directly rather than through the usual First Brands account. It caused what Alvarez & Marsal describe as “significant confusion" and led to $150 million of customer payments being withheld.
Sources: Automotive News / Bloomberg
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This article originally appeared on CarBuzz and is republished here with permission.
