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First Brands Faces Potential Liquidation as Loan Request Fails

  //business-finance.news-articles.net/content/202 .. potential-liquidation-as-loan-request-fails.html
  Published in Business and Finance on Tuesday, January 27th 2026 at 1:52 GMT by reuters.com
      Locales: UNITED STATES, UNITED KINGDOM

New York, NY - January 27, 2026 - A potential crisis is brewing for First Brands, a portfolio company owned by private equity firm L Catterton, as lenders are reportedly opposing a $700 million loan request and instead advocating for a liquidation of assets, according to a Wall Street Journal report published today.

This development paints a concerning picture for First Brands, which houses a collection of well-known cleaning and maintenance product brands including Zep, Weiman, and Detergent Depot. The lenders' stance signals significant doubts about the company's financial viability and potentially marks a challenging moment for L Catterton, who acquired First Brands in 2018.

The Roots of the Problem: Pandemic Aftershocks and Weak Performance

The reported resistance to the loan request isn't a sudden occurrence. It's the culmination of years of lackluster performance, particularly exacerbated by the economic shifts following the COVID-19 pandemic. While the initial pandemic period saw a surge in demand for cleaning supplies, this proved to be a temporary boost. The subsequent easing of restrictions, coupled with broader inflationary pressures and supply chain disruptions, has taken a toll on First Brands' bottom line.

Sources familiar with the situation, speaking anonymously to the Wall Street Journal, suggest that First Brands has consistently fallen short of projected financial performance. Analysts had noted a reliance on price increases to maintain margins in recent years, a tactic that has proven unsustainable as consumers become increasingly price-sensitive.

Why Liquidation is on the Table

Lenders often provide financing to companies undergoing restructuring or experiencing temporary difficulties. However, their willingness to extend a $700 million loan suggests a level of confidence that, according to the Wall Street Journal, they simply don't possess regarding First Brands' future prospects. Pushing for asset liquidation indicates a belief that the company's value is best realized through a sale of its individual brands and business segments, rather than attempting to resuscitate the entire enterprise under its current structure.

This strategy minimizes lenders' risk and allows them to recoup as much of their investment as possible. Asset sales, particularly of established brands like Zep and Weiman, can attract considerable interest from other companies looking to expand their product portfolios or enter the cleaning and maintenance market. A liquidation would involve a process managed by an independent third party, who would solicit bids and oversee the sales.

Implications for L Catterton

The situation poses a considerable challenge for L Catterton. Private equity firms operate on a model of acquiring companies, improving their performance, and then selling them for a profit. A liquidation would represent a significant loss on investment and could impact L Catterton's reputation and future fundraising efforts. While the firm undoubtedly possesses significant resources and experience, navigating the fallout from a failed investment can be damaging.

L Catterton's previous strategies for First Brands, presumably aimed at driving growth and efficiency, have evidently not yielded the desired results. The firm is likely re-evaluating its investment approach and assessing potential options, although a public statement has yet to be released. Attempts by Reuters to reach representatives from L Catterton and First Brands for comment have been unsuccessful.

Looking Ahead: Uncertainty and Potential Brand Fragmentation

The next steps for First Brands remain uncertain. While liquidation seems the most likely path currently, there's a slim possibility that alternative financing options or a strategic acquisition could emerge. However, given the lenders' firm stance, such a turnaround would require a swift and convincing demonstration of improved financial performance.

Regardless of the outcome, the situation highlights the risks inherent in private equity investments and the ongoing challenges facing businesses adapting to a post-pandemic economy. The fragmentation of First Brands' established portfolio of cleaning product brands is likely, impacting consumer availability and potentially leading to shifts in market share amongst competing companies in the months and years to come. The case serves as a stark reminder of the fragility of even well-known brands in the face of economic headwinds and shifting consumer behavior.