The Official Committee of Unsecured Creditors in the First Brands Group bankruptcy has defended its retention of forensic financial advisor Nardello & Co., revealing the firm has already traced hundreds of millions of dollars in assets tied to alleged fraud by the company’s former leadership.
Highlights
- Nardello & Co. has traced over $100 million personally received by former executive Edward James through entities he controlled, including Optimus Private Capital LLC and JCMC Investment Group LLC.
- More than $130 million in assets connected to Patrick James have been identified, including recently transferred assets held through trusts and other asset protection vehicles.
- The investigation has uncovered hundreds of millions of dollars in additional assets potentially available to satisfy unsecured creditors’ claims.
- The Ad Hoc Group of creditors objected to Nardello’s retention, citing the Debtors’ constrained liquidity and potential duplication with the court-appointed Examiner’s work.
Forensic Investigation Reveals Scope of Alleged Diversion
In a reply filed February 3, 2026, in the U.S. Bankruptcy Court for the Southern District of Texas, the Committee outlined the progress Nardello has made since its engagement began on December 1, 2025. The firm has billed approximately $1.3 million for its services to date.
Nardello’s work has focused on identifying and tracing assets allegedly diverted from First Brands’ estates. The investigation found that Edward James maintained personal financial relationships with Onset Financial and other providers of asset-based financing to First Brands. According to the filing, James controlled these relationships in his capacity as a company executive and insider.
The forensic advisor identified Optimus Private Capital LLC and JCMC Investment Group LLC as vehicles through which Edward James allegedly perpetrated and received proceeds from what the Committee characterized as corrupt financial arrangements.
Committee Pushes Back on Duplication Claims
The Ad Hoc Group argued that Nardello’s services duplicate the work of the court-appointed Examiner and are not justified given First Brands’ deteriorating financial position. The Committee rejected both arguments.
The Committee drew a sharp distinction between its role and that of the Examiner. The Examiner has no direct financial stake in the Debtors and no fiduciary duty to maximize recoveries for any stakeholder group. The Examiner’s mandate is limited to reviewing First Brands’ factoring programs and off-balance sheet financing transactions and producing interim and final reports to the Court.
In contrast, the Committee is tasked with investigating potential estate causes of action and, if warranted, seeking standing to pursue claims on behalf of the estates and their creditors.
Examiner Timeline Creates Urgency for Independent Investigation
The Committee highlighted a critical gap in the Examiner’s timeline. Under the Examiner’s court-approved Work Plan, the first interim report is not expected until April 9, 2026. The Work Plan contains no deadline for a final report.
The Committee also noted that the Examiner is not required to share investigative details prior to filing reports or to provide the Committee with any documents or information obtained during the investigation. The Examiner maintains a restricted document depository accessible only to the Examiner’s team.
Given First Brands’ precarious financial standing, the Committee argued it cannot afford to wait months for reporting that may not address its specific needs. The Committee stated it must be permitted to discharge its fiduciary duties through its own investigative resources.
First Brands Bankruptcy Background
First Brands Group, a global automotive aftermarket parts supplier headquartered in Rochester Hills, Michigan, filed for Chapter 11 protection in September 2025. The company reported between $1 billion and $10 billion in assets against $10 billion to $50 billion in liabilities. At the time of filing, the company declared just $12 million in cash.
First Brands’ portfolio includes major brake industry brands such as Raybestos, Centric Parts, StopTech, and Carlson brake hardware, along with FRAM filtration, TRICO wipers, Autolite spark plugs, and Cardone remanufactured parts.
On January 26, 2026, First Brands announced the wind-down of its North American Brake Parts Inc., Cardone, and Autolite business units after failing to secure funding or complete sales for those operations.
Founder and former CEO Patrick James and his brother Edward James were indicted on January 29, 2026, on federal charges including conspiracy to commit wire fraud and bank fraud, conspiracy to commit money laundering, and multiple counts of wire fraud and bank fraud. Patrick James faces an additional charge of managing a continuing financial crimes enterprise. Both men have pleaded not guilty.
The case is In re First Brands Group, LLC, et al., Case No. 25-90399 (CML), U.S. Bankruptcy Court for the Southern District of Texas.
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