Autolite spark plugs. Autolite is a brand of First Brands Group. Creditors have been trying to determine whether to devote more money to saving parts of the business. (Nick Oxford/Bloomberg)
January 30, 2026 5:07 PM, EST
First Brands Group and its main creditors will start confidential mediation sessions to potentially resolve a series of business-crippling disputes that have left the auto parts maker weeks away from a shutdown that would throw 13,000 people out of work.
The bankrupt company, senior lenders and a committee of unsecured creditors will work with U.S. Bankruptcy Judge Marvin Isgur in Houston over the next two weeks to decide whose debt is backed by collateral, which assets are really owned by third-party financiers and how to keep First Brands alive long enough to sell its factories and other operations.
The mediation sessions will end Feb. 13 or sooner if one of the parties gives up and files a motion to immediately begin liquidating the company, according to a Jan. 29 court order. The company has been struggling for months to restructure billions of dollars in debt, much of which was raised through fraud, federal prosecutors in New York have alleged.
Company founder Patrick James and his brother Edward, a former executive at the firm, were indicted for allegedly defrauding First Brands’ financing partners. They have denied wrongdoing.
Restructuring advisers who took over the firm after its top executives said in court this week that the fraud was more pervasive and damaging than they initially realized.Â
At least 4,000 employees in North America have already lost their jobs because the company has been unable to sustain some operations, like its brakes division. Another 13,000 jobs are at risk as First Brands is running on a week-by-week basis using a $48 million lifeline from automakers who have agreed to pay for parts in advance, according to court documents.
Creditors have been trying to determine whether to devote more money — and if so, how much — to saving parts of the business. Some influential lenders have already decided it’s better to sell it off than save it, Bloomberg News reported.
Since seeking bankruptcy protection in September, First Brands has been working to unwind a complex web of so-called factoring transactions that restructuring advisers say left the company burdened with billions of dollars of debt. Much of that financing was raised using fake or inflated invoices, according to the advisers.
Under those arrangements, First Brands sold the right to collect payments from customers that had purchased its auto parts, generating billions of dollars in funding.
Creditors are also battling over priority claims and collateral rights, including liens on the auto parts the company continues to manufacture and sell.Â
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