First Brands Auto Parts Bankruptcy Just Took A Surprising Turn

Its bankruptcy hangs in the balance, and it's a big deal. Recently, First Brands' CEO, Patrick James stepped down when a US Justice Department probe started based on the company's dealings with creditors. Now, First Brands is accusing James of misappropriating millions, perhaps billions of dollars.

Via Reuters, the company claims in a lawsuit that "James enriched himself and his family by 'misappropriating hundreds of millions (if not billions) of dollars from First Brands." The lawsuit is filed with the US Bankruptcy Court for the Southern District of Texas, and a spokesperson for James said that he "categorically denies the baseless and speculative allegations contained in the First Brands complaint."

We pointed out in a previous piece covering this story that the timing of James stepping down was not a good look. Now, First Brands is claiming James transferred hundreds of millions of dollars from the company to himself or entities affiliated to him between 2018 and 2025, mostly between 2023 and 2025. If that turns out to be true, that's an insane amount of money bouncing around.

"Mr. James was given no opportunity to respond before the complaint was filed and he intends to immediately challenge it. Mr. James has always conducted himself ethically and is committed to doing everything he can to support First Brands’ stakeholders during the restructuring process."

– Spokesman for Patrick James, per Reuters

The accusation of transferring hundreds of millions of dollars from the company to himself or affiliates is so immense it's hard to believe at face value. That's not something a sane person would expect to get away with. To his credit, on November 3, James filed a legal motion supporting a fiduciary investigation into the company's financial practices.

First Brands's claim that James caused the company to incur at least $2.3 billion in liabilities also brings attention to what Reuters describes as "opaque financing in the private credit market," and casts "a spotlight on the exposure of some of the world's top financial institutions."

While First Brands isn't a well known name, almost everybody – even those who don't give a rip about cars – knows at least some of the companies in the First Brands family.Aside from common light bulbs from Philips and Anco wiper blades, it owns four brake companies: International Brake Industries, Raybestos, and Centric, then Centric owns StopTech. Rabestos and Centric are well known as cost-effective OEM quality replacements for OEM parts, while StopTech is aimed at the premium and performance market. International Brake Industries provides the smaller parts for brake systems and brake kits.

*Michelin is used only as a license for windshield wiper blades. The tire manufacturer is not part of First Brands.

If First Brands was to go under, it could leave the shelves in auto parts stores a little light. More likely, though, the brands would be sold off to another corporation collecting aftermarket brands.