Lavish CEO Lifestyle Linked to First Brands' $2B Collapse

Patrick James immigrated to the US from Malaysia in the 1980s to attend a college in Ohio. He went on to build an auto-parts empire with thousands of workers and generate billions of dollars in sales by expanding through the acquisition of smaller companies.

However, his First Brands Group filed for bankruptcy after disclosing that over $2 billion (£1.4 billion) was unaccounted for. New directors worked with forensic accountants to investigate the mismatch in First Brands' financing arrangement.

The CEO borrowed over $10 billion (£7.4 billion) from major players despite earlier lawsuits from business partners who claimed he made misrepresentations in financing arrangements. First Brands secured funding through off-balance-sheet financing, such as borrowing against money owed by clients.

It also secured supply-chain financing from institutions that lent money against receivables. The arrangements grew over time into billions of dollars of off-balance-sheet debt.

James' strategy for First Brands was to expand the company through the acquisitions of auto-parts brands. The company now has operations across five continents, and the meteoric revenue growth was supported by corporate debt of over $6 billion (£4.4 billion) from Wall Street.

A Spiralling Financing Arrangement

Lenders said that James' company was getting into trouble entering 2025 after piling on more off-balance-sheet debts. First Brands became reliant on Utah-based Onset Financial, which offered funds at a high return rate. In May 2025, a company affiliate stopped making monthly payments to Onset, which then demanded millions of dollars in late fees and payment hikes.

Meanwhile, James was working to refinance the $6 billion (£4.4 billion) in corporate loans, but potential lenders were not informed about the off-balance-sheet debt. The refinancing effort faltered. Investors then started seeking more information on First Brands' earnings and off-balance-sheet arrangements. The company even mulled selling its entire business.

While James believed the company would fetch at least $12 billion (£8.9 billion), no buyer emerged. As First Brands was heading towards bankruptcy, lenders demanded that the company bring in new independent directors to examine the books. As they investigated the accounts, the directors found $2 billion more in borrowings than the underlying accounts receivable.

Blaming First Brands' Downfall on Macro Volatility

James recently asked a judge to dismiss a lawsuit accusing him of misappropriating hundreds of millions of dollars, explaining that companies that offered the company off-balance-sheet financing engaged in 'predatory' practices that pushed First Brands into bankruptcy.

Lawyers for James said he always prioritised First Brands and that its collapse was mainly due to macroeconomic factors. They argued that there wasn't sufficient evidence to hold James completely accountable. The lawyers added that First Brands could not withstand rising rates, tariffs, and costs related to debt. James eventually stepped down as CEO.

A History of Lawsuits

A 2009 lawsuit filed by a creditor alleged that James made omissions that gave a false understanding of the financial strength of those companies and the value of the collateral.

Years later, in 2011, an unpaid creditor alleged that James used affiliated companies to divert funds to himself. He also split off a part of his Vari-Form conglomerate in 2018, and the remaining portfolio, which included Trico and oversaw the aftermarket business, was later combined and rebranded as First Brands.

James presented Vari-Form as a stand-alone asset and allegedly lured debt capital from new investors. The following year, the company filed for bankruptcy in Canada. Around the same time, James began expanding his personal real estate assets, which included a $23 million (£17.1 million) Malibu mansion.