By Devika Madhusudhanan Nair
(Reuters) – Bankrupt First Brands sued its former CEO and founder Patrick James on Monday, accusing him of orchestrating frauds that left the U.S. auto parts maker insolvent.
James enriched himself and his family by “misappropriating hundreds of millions (if not billions) of dollars from First Brands,” the company said in a complaint filed in the U.S. Bankruptcy Court for the Southern District of Texas.
A lawyer and a separate representative for James did not immediately respond to a Reuters request for comment.
Its bankruptcy has raised concerns about opaque financing in the private credit market and highlighted the exposure of some of the world’s leading financial institutions.
First Brands said James caused the company to incur at least $2.3 billion in liabilities based, at least in significant part, on nonexistent or manipulated invoices. It also accused him of engaging in financial transactions involving special purpose vehicles that offered double guarantees.
James transferred hundreds of millions of dollars from the company to himself or entities affiliated with him between 2018 and 2025, with the majority of the transfers taking place between 2023 and 2025, First Brands added.
James resigned as CEO last month.
The Ohio-based company, which makes filters, brakes and lighting systems, has appointed a special committee of independent directors to investigate its off-balance sheet financing.
Earlier Monday, James filed a legal motion supporting the court’s appointment of a fiduciary who would investigate the company’s financial practices that led to the bankruptcy filing.
First Brands filed for bankruptcy in September after its lenders began investigating irregularities in the company’s financial reports.
(Reporting by Devika Nair in Bengaluru; Editing by Miyoung Kim and Edwina Gibbs)