The automotive parts firm aims to secure restructuring to pursue claims against former executives over alleged fraudulent asset pledges.
First Brands has petitioned a US bankruptcy judge to approve a restructuring plan centered on funding lawsuits targeting former executives. The plan includes a litigation trust to recover up to $1bn from those accused of fraudulently pledging company assets as collateral for loans, allegedly financing lavish lifestyles.
The company, which shuttered 17 plants and cut 4,000 jobs earlier this year, faces liquidation risks under Chapter 7 if the plan is rejected. Lenders withdrew support after new leadership uncovered widespread wrongdoing, complicating efforts to sell remaining manufacturing sites.
Founder Patrick James and other executives face criminal fraud charges, including fabricated invoices. The firm warns that failure to approve the plan could trigger a chaotic collapse, disrupting ongoing legal actions.