First Brands bondholders bring in financial watchdog that probed FTX’s 2022 crash

First Brands creditors have hired Nardello & Co., the same company that investigated the FTX collapse, to dig into how the bankrupt auto-parts supplier handled shady off-the-books financing before crashing into Chapter 11.

The job is to dig through the murky disaster of off-the-books financing that First Brands was using before the auto-parts supplier crashed into bankruptcy.

According to a court filing from Wednesday, the committee representing unsecured creditors said they officially brought in Nardello on December 1. Their task includes digging into factoring and financing arrangements that money flowed through, and Nardello is also investigating accounts and shell entities tied to Patrick James, the founder of First Brands, plus other top insiders.

Investigators are also looking at James and insiders

The creditors’ committee asked the judge to let Nardello start work immediately, because time is tight and there are “time-sensitive matters” that need urgent attention in this Chapter 11 mess.

And yes, the judge still needs to approve the company officially, but that’s standard. Meanwhile, Nardello’s track record is already on the table. The committee reminded the court that during the FTX case, Nardello helped claw back billions in assets for creditors. They also pointed out that Nardello is not new to high-profile wreckage.

Nardello worked for creditors of Purdue Pharma, the opioid giant that filed Chapter 11 in 2019 after lawsuits over OxyContin. They also assisted in the Alex Jones case after the conspiracy theorist went bankrupt over that $1.4 billion Sandy Hook defamation ruling.

This probe into First Brands is only one of many. The entire Chapter 11 collapse is now under a microscope. On top of the Nardello investigation, advisers working for the company have already sued Patrick James, accusing him of looting corporate funds. He denies doing anything wrong.

Things are heating up elsewhere too. A former finance director at First Brands told creditors he plans to invoke the Fifth Amendment at his deposition. That means he doesn’t want to answer questions because of a federal criminal probe that’s already looking into the company.

The legal mess is officially filed as First Brands Group LLC, case number 25-90399, in the US Bankruptcy Court for the Southern District of Texas.

There are no excuses left on the table. First Brands went down, and now the knives are out. Every account, every deal, and every insider is getting examined. Nardello has already started picking apart the pieces. The bondholders want answers, and they’re not playing around.

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