Bankrupt auto-parts manufacturer First Brands is at risk of running out of funds by the end of January, according to its attorneys. The company is currently seeking additional financing from its lenders and is actively pursuing near-term asset sales to gain more time for business restructuring amid ongoing fraud allegations. First Brands, which sells filters, brakes, lighting systems and other auto parts, initiated Chapter 11 bankruptcy proceedings in late September. The company accused its former CEO, Patrick James, of misappropriating funds as the company’s financial situation deteriorated in 2025.
According to Sunny Singh, the company’s attorney, First Brands has approximately $190 million remaining after borrowing $1.1 billion to commence its bankruptcy proceedings. Singh stated at a court hearing in Houston, Texas, that this cash reserve is only sufficient to sustain business operations until the end of January. This potential cash shortfall could impede the company’s efforts to investigate fraud related to its pre-bankruptcy financing agreements. The company is currently engaged in discussions to secure further loans from its lenders and intends to seek court approval to sell certain assets by the end of the month.
The additional funding is intended to provide the necessary time to stabilise First Brands’ operations, investigate the alleged fraud, and determine the distribution of assets among the company’s creditors. The collapse of First Brands, which had backing from major Wall Street financial institutions, has raised concerns regarding potential instability in the private credit markets. First Brands initiated a lawsuit alleging that Patrick James incurred at least $2.3 billion in liabilities by selling unpaid customer invoices to third-party financial institutions, using falsified or non-existent invoices.
Junior creditors have made allegations of kickbacks involving Edward James and Onset Financial, which both parties deny. Judge Christopher Lopez has appointed an independent examiner to investigate the fraud allegations within the company, including the new claims, and has denied the junior creditors’ immediate demands to seek more information from Edward James and Onset, to avoid interfering with the examiner’s investigation at this stage.
