Here's what you need to know
- First Brands laid off 146 people at its Ohio headquarters on Friday.
- The company was also in court in Houston pertaining to its Chapter 11 bankruptcy filing from September. In that hearing, it says it's close to finalizing the sale of some brands.
- Attorney says the alleged fraud badly damaged the First Brands' reputation and relationship with customers and suppliers.
First Brands laid off 146 people at its corporate office in Cleveland. The layoff was effective immediately.
The list of affected positions includes C-suite jobs such as the vice president of operations, brakes; vice president of customer services and the vice president of warehouse distribution sales channel.
A notice sent to the mayor of Cleveland and other officials says the company expects the layoffs to be permanent. Similarly to other layoffs First Brands announced recently, the company says in a letter it has "gone to great lengths" to keep doors open.
It continues that announcing layoffs any sooner than the same day they were conducted would have jeopardized any potential sale.
"Announcing this action earlier than today would have jeopardized the sale process and the company believed that potential bidders would not have been interested in the business lines without its employees," the letter says. "Finding a bidder who would have allowed the company to continue operating all of its business lines was a primary goal of the sale process."
First Brands also says announcing layoffs sooner would have jeopardized any potential financing the company was seeking.
"While certain outside parties did ultimately decide to fund specific business lines, the company was unfortunately unable to receive any commitments to fund company-wide operations and, moreover, several such sources of funding unexpectedly and suddenly decided to reduce or cease their funding, such that the sale of certain facilities and certain operations of the company cannot proceed as the company had reasonably believed would occur," it says.
So far, layoffs announced include:
- 146 at the corporate office in Cleveland.
- 130 employees at Hopkins Manufacturing in Edgerton, Kan.
- 81 employees at Hopkins Manufacturing's Emporia, Kan., facility.
- Possibly upwards of 1,000 employees at Champion Labs, Albion, Ill., as reported by local news stations.
- 76 employees at FRAM in Hebron, Ky.
- 64 employees at AVM in East Marion, S.C.
- 87 employees in Arlington, Texas.
- 41 employees at Cardone in Harlingen, Texas.
- 87 employees at Cardone in Arlington, Texas.
- 98 employees in Patterson, Calif.
- 251 employees at Eagle Machining in Fayette, Ohio.
- 73 employees at Eagle Castings in Hanover, Penn.
In a Friday court hearing, attorney Matt Barr said the company was now finalizing separate sales of Walbro, Horizon, TMD and pumps business lines. Some OEMs, such as Ford, General Motors and Harley-Davidson stepped in with funding to keep business lines open that provide parts for their vehicles. The sale of these lines is supported by the OEMs, Reuters says.
The company's collapse began late last year when it defaulted on several debt payments. It filed for Chapter 11 protection in September and First Brands went up for sale in January. Later that month, two former executives, ex-CEO Patrick James and his brother Edward James, were indicted on charges of conspiracy to commit money laundering, wire fraud and bank fraud.
Peter Andrew Brumberts plead guilty and is cooperating with prosecutors in the case.
Investigators say that, from 2018-2025, the James brothers built and then bankrupted First Brands, with more than $2 billion unaccounted for by the time it filed bankruptcy. The brothers have plead not guilty.
Barry says the fraud was worse than anyone realized when First Brands filed for bankruptcy and that the scope of the problem strained relationships with both customers and suppliers.
"There was simply no trust in the company," Barr says.
Fallout has continued in the financial sector as well as in the parts business. Investors in Jefferies Financial Group, a New York City investment bank, sued over losses tied to the collapse. They're seeking $18.4 million in damages. Capital firm Raistone is also liquidating after its exposure.
