First Brands bankruptcy and legal fallout

First Brands, a U.S. auto‑parts maker, filed for Chapter 11 bankruptcy in September 2025 after its debt swelled to more than $9 billion while cash dwindled to $12 million. In January 2026 the U.S. Attorney for the Southern District of New York charged founder Patrick James with nine offenses, including operating a continuing financial‑crimes enterprise under a rarely used statute that carries a mandatory ten‑year minimum. Two senior finance executives had already pleaded guilty to invoice fraud and debt concealment, bolstering the prosecution’s case.

By August 2026, the bankruptcy case had generated professional fees that outstripped the value of assets sold. Advisers and lawyers logged $247 million in fees, while asset sales of divisions such as Walbro, Horizon North America and others totaled roughly $227 million. Major firms like Weil Gotshal & Manges and Alvarez & Marsal received tens of millions for their work, leaving creditors awaiting payment after the professionals have been compensated.