First Brands, a major auto parts supplier, surprised Wall Street when $2.3 billion reportedly went missing from its accounts, according to Reuters and the Financial Times.
The company’s CEO, Patrick James, has resigned, raising questions about the future of the $10 billion company. Now, major banks may face billions in losses, according to The New York Times, which reported in October 2025.
Bankruptcy Filing
First Brands filed for Chapter 11 bankruptcy on September 29, 2025. They reported debts between $10 billion and $50 billion, but their assets are less than $10 billion, according to Reuters.
Jefferies, UBS, and BlackRock are major creditors. They may face significant losses as they try to recover their investments, according to reports from the Wall Street Journal and Bloomberg in September 2025.
Company Background
First Brands, founded by Malaysian entrepreneur Patrick James in 2013, grew by buying other companies with borrowed money. The company has 26,000 employees across six continents and generates $5 billion in annual sales, according to the Financial Express and The New York Times.
It supplies large retailers, such as Walmart, AutoZone, and NAPA, through brands like Fram, Autolite, and Raybestos, as reported by SwissInfo in October 2025.
CEO Exits After $2.3 Billion ‘Simply Vanished’
On October 13, 2025, CEO Patrick James resigned after creditors revealed that $2.3 billion was missing from First Brands’ accounts, according to Reuters. In bankruptcy court, lawyers stated that only $12 million remained in the company’s accounts, stating, “There’s $12 million in the bank account today. There is nothing else,” according to AP News.
The Financial Express and Yahoo Finance reported that the announcement followed reports of delayed payments and accounting irregularities, which raised concerns about the company’s sustainability. Barron’s provided additional coverage in October 2025.
Supply Chain Disruption
The bankruptcy has affected the automotive supply chain, according to the Financial Express. First Brands made spark plugs, wipers, filters, and brake parts for major retailers.
Workers at several manufacturing plants are facing job insecurity as the company restructures, based on statements from Jefferies released in October 2025.
Financial Engineering Risks
First Brands relied heavily on invoice factoring, receivables financing, and off-balance-sheet borrowing. These methods were similar to what led to the 2021 Greensill Capital failure, according to SwissInfo. From 2023 to 2024, revenue only grew by 1.3%, while debt servicing costs increased by 38%, as reported by Bloomberg Opinion.
Experts warn that the private credit markets are complex, making it harder to spot problems, even with more thorough checks, CNBC noted in October 2025.
Raistone’s Collapse
Raistone Capital has laid off about half its employees after the bankruptcy of First Brands, which accounted for 80% of its revenue.
Bloomberg confirmed this information. SwissInfo reported in October 2025 that these layoffs highlight the wider impact of the company’s collapse.
DOJ Launches Investigation
Federal prosecutors are investigating First Brands’ bankruptcy and its dealings with creditors, as confirmed by Reuters on October 9.
The Department of Justice is in the early stages of its investigation into how $2.3 billion could vanish from a publicly traded company, according to reports from the Financial Times and Bloomberg Law in October 2025.
Creditor Legal Actions
Raistone Capital filed an emergency motion demanding the court appoint an independent examiner to investigate the missing $2.3 billion, arguing the company-appointed investigation is “woefully insufficient given the magnitude of potential misconduct,” Reuters reported.
Katsumi Global claims it is owed over $1.7 billion from unpaid bills. The company has total debts of $11.6 billion. As a result, bankruptcy proceedings are likely to be lengthy and complicated, according to Bloomberg in October 2025.
Leadership Transition
Restructuring expert Charles Moore was named interim CEO following James’ resignation, the Financial Express reported.
Moore, who joined the company in September as Chief Restructuring Officer, stated that the company’s “immediate priority is to ensure stability” while investigating “past use of various financing instruments,” according to a Reuters report and a Business Wire announcement from October 2025.
Emergency Funding Secured
Despite having only $12 million in liquid assets, First Brands secured court approval to access $500 million from a $1.1 billion debtor-in-possession facility to fund operations, make payroll, and pay suppliers, the Financial Express reported.
A lawyer representing lenders described it as “funding $1.1 billion into effectively a black box,” GTR noted in October 2025.
Investigation Focus
An independent special committee is investigating whether First Brands’ receivables were factored multiple times and examining off-balance-sheet financing arrangements, Reuters reported.
Initial reviews revealed that debt collateral has become “commingled,” with inventory valued at $376 million as of August 2025, according to the Financial Express. Experts noted that First Brands had been struggling to deliver to customers or pay vendors on time for at least two years before its bankruptcy, as reported by SwissInfo in October 2025.
Jefferies Exposure
Jefferies faces $715 million in exposure through Point Bonita Capital—representing a quarter of the fund’s $3 billion in trade finance assets, according to a Jefferies statement.
GTR and CNBC reported in October 2025 that the investment bank maintains its direct exposure is limited to $43 million and has sought to calm investor concerns.
UBS and Millennium Losses
UBS O’Connor has over $500 million in total exposures, with an estimated 30% exposure through invoice financing in one of its funds, according to CNBC.
Millennium Management took a $100 million writedown on First Brands’ debt as the scale of losses became apparent in October 2025.
Brand Portfolio Value
First Brands’ portfolio includes well-known automotive brands acquired through more than 20 debt-financed transactions, totaling approximately $4 billion, from 2018 to 2025, as reported by The Financial Express. These include Fram filters (2019), Autolite spark plugs, Raybestos brakes (2020), Anco wiper blades, and Cardone remanufactured parts.
These established brands represent significant value that creditors hope to recover, according to Neuberger Berman’s analysis from October 2025, with additional details documented on Wikipedia.
Invoice Factoring Scheme
The collapse exposed vulnerabilities in invoice factoring arrangements where receivables are sold to lenders for immediate cash, Reuters reported.
Investigators are examining whether First Brands factored the same receivables multiple times across different lenders—a practice that would constitute fraud, according to Trade Finance Global in October 2025.
Private Credit Market Concerns
The scandal has raised questions about the $1.7 trillion private credit market, which has grown rapidly with limited oversight, CNBC reported.
Analysts note that lending standards in leveraged markets are at their weakest point in recent history, with lenders prioritizing deal volume over due diligence, as noted by SwissInfo in October 2025.
Due Diligence Failures
“There has been so much demand for these assets that people have lost sight of doing diligence,” according to NYU Stern business school bankruptcy lawyer Joseph Sarachek, quoted by SwissInfo.
CNBC analysis highlighted how sophisticated financial institutions often fail to detect fraud despite having extensive resources.
Two-Year Decline
Evidence suggests that First Brands had been struggling for at least two years before its bankruptcy, with mounting vendor payment delays and delivery failures, according to SwissInfo.
Yet lenders continued extending credit, suggesting breakdowns in monitoring and oversight, according to CNBC coverage from October 2025.
What Happens Next
The DOJ investigation could lead to criminal charges if fraud is proven. Creditors will battle over remaining assets in bankruptcy court, with the next hearing scheduled for October 29.
The outcome will shape private credit market practices and potentially trigger regulatory reforms.