Former CEO Accused of Massive Financial Fraud Amid Bankrupt First Brands Scandal

Bankrupt First Brands has taken legal action against its former CEO, Patrick James, accusing him of massive fraud that left the company insolvent. The lawsuit alleges that James misappropriated millions from the company and engaged in dubious financial practices. James denies the allegations and plans to contest them.

Bankrupt auto parts maker First Brands has filed a lawsuit against its former CEO and founder, Patrick James, accusing him of financial fraud that plunged the company into insolvency. The legal action, filed with the U.S. Bankruptcy Court for the Southern District of Texas, claims James misappropriated vast sums for personal gain.

A representative for James countered the claims, describing them as 'baseless' and 'speculative.' The spokesperson asserted that James did not have the opportunity to respond prior to the filing and intends to vigorously contest the allegations. James, who recently stepped down as CEO, has pledged to support stakeholders during the restructuring process.

Meanwhile, First Brands' bankruptcy and allegations against James have intensified scrutiny on private credit markets and exposed vulnerabilities within major financial institutions. The company has appointed a special committee to investigate off-balance-sheet financing practices, and James has sought a fiduciary's appointment to further delve into the company's financial activities preceding its bankruptcy.

(With inputs from agencies.)