Aftermarket giant First Brands juggles bankruptcy, fraud allegations
The aftermarket parts industry is no stranger to the pressures of high leverage and thin margins, but the sudden fall of high-flying First Brands Group has grabbed the attention of an industry acquainted with massive market swings and the ensuing business struggles of suppliers.
Known for brands including FRAM filters, Raybestos brakes, Trico wipers, and Autolite spark plugs, among others, the company is now mired in a complex Chapter 11 bankruptcy that is complicated by a multibillion-dollar fraud scandal. What began as a strategic expansion fueled by debt-funded acquisitions has turned into a cautionary tale of opaque financing, alleged executive misconduct, and a desperate race to stabilize operations before the business completely folds.
The turmoil for First Brands became public in September 2025, but the seeds of its collapse were sown much earlier through a business model heavily reliant on leveraged loans and aggressive off-balance-sheet financing. According to the sources, the company’s growth was largely predicated on acquiring established products sold through massive retailers like Walmart and O’Reilly Auto Parts. However, the capital structure supporting these brands was fragile; by the time the company filed for bankruptcy, it reported roughly $4.6 billion in off-balance-sheet liabilities.
The breaking point arrived in the summer of 2025 when a proposed $6 billion refinancing failed. Investors grew wary of the company’s reliance on factoring—a practice where a company sells its future cash flows to a third party for immediate liquidity. Estimates suggest that 70% of the supplier’s revenues were channeled through these arrangements.
When the Chapter 11 petition was finally filed in the Southern District of Texas, the sheer scale of the financial distress became apparent. First Brands listed liabilities between $10 billion and $50 billion, with assets between $1 billion and $10 billion.
The situation shifted from a financial crisis to a legal battle in November 2025, when the company filed a lawsuit against its founder and former CEO, Patrick James, who resigned in October. The suit alleges that James “fraudulently secured billions of dollars of financing” by misrepresenting the firm’s financial health. The company also claims James diverted hundreds of millions of dollars to himself, his family, and related trusts to fund a “lavish lifestyle.” The legal complaint suggests James used duplicate and fabricated invoices to obtain over $2.3 billion through factoring, essentially “lining his pockets” while the company’s core business was starved of capital.
Steps to stabilization
In the wake of James’s resignation, the company subsequently turned to Chuck Moore, a restructuring veteran and First Brands Chief Restructuring Officer since September 2025, to lead as interim CEO. Moore’s immediate priority has been to stabilize a global operation that spans more than a dozen countries, with the Chapter 11 filing in late September.
“These actions mark an important step toward stabilizing First Brands’ operations and securing a long-term future for the company’s world-class portfolio of aftermarket automotive part brands,” said Moore. “With committed funding from our key financial partners, we remain focused on supporting our employees, working with our valued suppliers, and delivering best-in-class aftermarket automotive technology for our customers globally. We are confident in the strength of First Brands’ industry-leading portfolio and the essential role we play in the automotive supply chain.”
Steps announced by First Brands in December include:
- Driving momentum across customer channels, with ordering patterns trending above 90% of pre-petition levels and new business opportunities with over 50 existing and potential customers since October, reflecting continued confidence in First Brands’ product quality and customer service.
- Making substantial progress unlocking its supply chain in recent weeks, with over 95% of First Brands priority vendors working with the company and continuing to provide goods and services.
- Installing a refreshed management team, including interim CEO Moore, with deep automotive, industrial, and restructuring experience who have strengthened execution, tightened operational controls, and improved visibility across the business.
- Engaging another team as senior advisors to accelerate performance improvements and support development of a comprehensive long-term business plan aligned with the company’s restructuring objectives.
These actions have improved the company’s operational foundation and positioned it to advance its long-term plan, according to the statement. Further, all of the company’s distribution and manufacturing centers are operational and shipping customer orders.
Long-term pathways
As First Brands advances its restructuring, the company is actively pursuing several meaningful pathways to create value for all stakeholders. These include operational, legal, and financial initiatives.
Key long-term value creation and growth initiatives include:
- Executing significant performance improvement opportunities, including targeted cost reductions, supply chain enhancements, and category-specific profitability initiatives. These efforts, guided by the company’s management team and supported by industry experts, represent substantial upside once implemented as part of the company’s long-term business plan.
- Capitalizing on strong industry positioning within the broader aftermarket and select OEM channels, where long-term demand trends remain favorable. These tailwinds, combined with the company’s scale and recognized brands, support a solid commercial foundation going forward.
First Brands is engaged in discussions to restart traditional customer factoring programs in the ordinary course of business.
While these efforts are underway, the company is simultaneously pursuing other factoring alternatives as well as expedited payment terms with its customers to improve operational delivery.
Also in December, First Brands filed a request for expedited relief to obtain near-term access to approximately $250 million that is either being held by customers or currently segregated in connection with the Chapter 11 process.
These funds are related to customer receipts for orders that the company has already fulfilled but has not been able to access to date, thereby artificially impairing First Brands’ true liquidity and cash flows, and causing “unfounded concerns” regarding the company’s financial position, the statement noted.
The release of these funds will supplement the company’s existing $1.1 billion of debtor-in-possession financing to improve First Brands’ liquidity and support reinvestment in the business to drive long-term growth.
Taken together, these actions represent sources of meaningful value creation and support the company’s long-term strategic and financial objectives.
Additional information regarding First Brands’ Chapter 11 process is available at https://restructuring.ra.kroll.com/firstbrands.
About the Author
Kevin Jones
Editor
Kevin has served as editor-in-chief of Trailer/Body Builders magazine since 2017—just the third editor in the magazine’s 60 years. He is also editorial director for Endeavor Business Media’s Commercial Vehicle group, which includes FleetOwner, Bulk Transporter, Refrigerated Transporter, American Trucker, and Fleet Maintenance magazines and websites.
Working from Beaufort, S.C., Kevin has covered trucking and manufacturing for nearly 20 years. His writing and commentary about the trucking industry and, previously, business and government, has been recognized with numerous state, regional, and national journalism awards.