First Brands Lender Can’t Distribute Cash From Bankruptcy Sales

Aequum Capital Financial II is temporarily barred from distributing any cash it collects from the inventory sales taking place as part of bankrupt auto-parts supplier First Brands’ liquidation, a judge ruled Wednesday.

The decision is an early victory for Bank of Americain its lawsuit against Aequum. The two lenders each claim collateral rights over car parts built by First Brands. Aequum has been trying to sell the inventory in order to repay more than $40 million that an affiliate of First Brands owes on a revolving credit line.

US Bankruptcy Judge Christopher Lopez agreed that any proceeds from ...