UBS to liquidate O'Connor funds hit by First Brands bankruptcy

UBS to Wind Down O'Connor Funds Following First Brands Bankruptcy

UBS's Strategy for O'Connor Funds

(Reuters) -UBS Group is winding down investment funds run by its hedge fund unit O'Connor, it said on Friday, after suffering losses due to exposure to bankrupt U.S. auto parts supplier First Brands Group.

Impact of First Brands Bankruptcy

The liquidation comes after UBS CFO Todd Tuckner said in October the bank was moving ahead with O'Connor's sale to U.S. brokerage Cantor Fitzgerald.

Client Protection Measures

He had acknowledged that the bank is "working through" whether funds with First Brands exposure would be included in the transaction.

Monetization Plans

"We informed investors last month that O'Connor's Working Capital Opportunistic funds are being wound down and the majority of the funds' assets will be monetized by the end of the year," a UBS spokesperson said.

Future of O'Connor Funds

"As a priority, we're taking steps to protect clients' interests and maximize recovery of the remaining First Brands Group-related positions through the complex bankruptcy process," the spokesperson said in an emailed statement to Reuters.

First Brands filed for bankruptcy protection in September after disclosing liabilities exceeding $10 billion.

UBS has more than $500 million in exposure to First Brands across several investment funds, including those managed by O'Connor, according to U.S. court filings.

The Swiss bank emphasized during its third-quarter earnings that it has no balance sheet exposure to First Brands and that the affected funds, targeted at sophisticated investors with clear risk disclosures, breached no investment guidelines.

UBS' plans to wind down its funds with First Brands Group exposure were first reported by The Financial Times on Thursday. 

(Reporting by Raechel Thankam Job in Bengaluru and Saeed Azhar in New York; Editing by Shreya Biswas)