Former First Brands CEO Accused of Fraud Leading to Bankruptcy
By Devika Madhusudhanan Nair
(Reuters) – Bankrupt First Brands has taken legal action against its former chief executive and founder, Patrick James, alleging fraudulent activities that left the U.S. auto parts manufacturer insolvent.
According to the lawsuit filed with the U.S. Bankruptcy Court for the Southern District of Texas, James is accused of enriching himself and his family by “misappropriating hundreds of millions (if not billions) of dollars from First Brands.”
First Brands claimed that James orchestrated schemes that led to the company incurring at least $2.3 billion in liabilities through non-existent or altered invoices and questionable financing transactions involving double-pledged collateral.
The lawsuit further alleged that James transferred substantial amounts of money from the company to personal accounts or entities linked to him, particularly between 2018 and 2025.
James resigned as CEO last month, following the company’s bankruptcy filing in September amid investigations into financial irregularities by its lenders.
In response to the allegations, a lawyer and representative for James have yet to provide a comment.
The bankruptcy of First Brands has raised concerns about the lack of transparency in private credit markets and has drawn attention to the exposure of major financial institutions.
To investigate the off-balance-sheet financing practices of the company, a special committee of independent directors has been appointed by First Brands, which manufactures filters, brakes, and lighting systems.
James has filed a legal motion in support of the court appointing a fiduciary to examine the company’s financial activities leading up to the bankruptcy filing.
Reporting by Devika Nair in Bengaluru; Editing by Miyoung Kim and Edwina Gibbs
