U.S. Bankruptcy Judge Christopher Lopez ordered First Brands group into liquidation on Tuesday, rejecting a plan to repay billions in debt through litigation.
First Brands argued the litigation claims against creditors and former executives, who the company says drove it into bankruptcy in September 2025, were worth $25 billion. The company’s liabilities topped $10 billion and, when it entered proceedings last year, it held just $14 million in cash.
“Before these Chapter 11 cases started, First Brands Group LLC and its affiliated debtors were one of the largest aftermarket auto suppliers in the world,” Lopez said in his ruling. “First Brands was integrated into the automotive industry.”
As the money dwindled, First Brands shed jobs and what businesses it could as going concerns. Billions of cash was unaccounted for, Lopez said, and debtors and other interested parties worked to keep the company alive as long as they could.
“Unfortunately, time was not on the debtor’s side,” Lopez continued, detailing the extra financing creditors extended and other efforts to keep the company afloat. However, the sales that did happen didn’t generate the cash First Brands hoped for. By the time the proposed Chapter 11 plan was negotiated, First Brands no longer operated any business and had terminated most of its workforce.
“A giant in the automotive industry would no longer exist as it did when it entered bankruptcy,” Lopez said.
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He went on to detail key parts of the plan and objections to it before, eventually, rejecting the plan, calling it “not feasible” and “unconfirmable under any circumstance” for a variety of reasons, including some that dealt with running afoul of the Bankruptcy Code and more that dealt with reasoning behind the litigation figures and timelines.
That said, Lopez also called the plan “the very best option they could negotiate under the circumstances” in one of the most complex cases filed in recent history. However, at this time, there’s “no doubt” it’s time to convert to Chapter 7.
“I reject any argument that the debtors’ professionals put their interests above the estates interest,” the judge said. First Brands just can’t overcome the liabilities in the case, he continued, adding it’s administratively insolvent and is not a viable business any longer. The judge said he intended to convert no later than Friday.
“Factored parties are going to remain not happy. Customers may not be happy. Admin creditors, professionals may not be happy with today’s result,” the judge said. “I also know there’s a bunch of people working today that are going to get a paycheck on Sept. 1 because people worked hard to make sure product lines were sold and were sold to people who could pick back up and get to work.”
