First Brands founder Patrick James obtained finance against non-existent or doctored invoices, as well as inventory that had already been transferred, in order to fund his “lavish lifestyle”, the company’s interim head has alleged.
Charles Moore of Alvarez & Marshal, who was appointed interim chief executive of First Brands last month, alleged that James “improperly secured billions of dollars in financing for First Brands from third parties”, in a November 3 court filing.
Moore claimed a minimum of US$2.3bn in liabilities was incurred through receivables finance facilities “at least in significant part” based on forged invoices, and that a further US$2.3bn in debt arose from double-pledging inventory.
He alleged that the proceeds were diverted into James and his family’s personal funds, and were used to pay for real estate, numerous luxury cars and a “private celebrity chef”.
Moore’s affidavit is in support of a lawsuit filed against James by First Brands, which is now under the control of Alvarez & Marshal.
A spokesperson for James told GTR he “categorically denies the baseless and speculative allegations contained in the First Brands complaint”.
“Mr James was given no opportunity to respond before the complaint was filed and he intends to immediately challenge it,” they said. “Mr James has always conducted himself ethically and is committed to doing everything he can to support First Brands’ stakeholders during the restructuring process.”
Moore was appointed chief restructuring officer following First Brands’ bankruptcy in September, at the time raising concerns over the company’s use of factoring and inventory finance.
Alvarez & Marshal has since conducted a forensic audit of the company’s finances and has found several discrepancies in its factoring arrangements, according to the affidavit.
Moore also said that in many instances amounts listed in invoices that had been factored “did not accurately reflect a customer’s order”, in some cases standing at 10 or more times higher than the actual amount.
Invoices were also submitted for financing even though they did not appear in debtors’ books or records, and the same invoices were also presented to more than one third-party financier, he alleged. Each of these practices occurred “in many cases”, the affidavit said.
One example cited was a sale of auto parts to General Motors Corporation, with an invoice value of around US$180.
The invoice was packaged along with thousands of others and presented to Katsumi – a joint venture owned by Japanese financial institutions Mitsui & Co and Norinchukin Bank – for financing.
However, once it was received by Katsumi, the invoice value was listed at more than US$9,000. Numerous other invoice values within the package had also been changed, raising its total value from US$2.3mn to US$11.2mn, Moore claimed.
Katsumi’s exposure to First Brands stands at US$1.75bn, the company’s lawyers have said, with lenders including Bank ABC and ING Belgium among those to have provided finance through the company.
The affidavit also highlighted off-balance sheet inventory finance facilities obtained by First Brands, via special purpose vehicle (SPV) debtors.
Some of these facilities involved SPVs purchasing inventory from First Brands subsidiaries and using those assets as collateral to support a loan – in the case of Evolution Credit Partners – or as part of a sale-and-leaseback transaction, as with Utah-based equipment leasing company Onset Financial.
In both arrangements, Moore said it appeared inventory was transferred to SPV debtors but remained on the First Brands subsidiaries’ balance sheets. Separately, that inventory was also retained in the borrowing base for First Brands credit facilities.
As a result, the same inventory was used to support loans both to First Brands subsidiaries and the SPV debtors, Moore said.
The court documents also claimed that funds from Onset were allegedly transferred to a “slush fund” controlled by James, called Bowery Finance II.
Nearly US$12bn flowed through the account between 2022 and 2025, including transfers involving James’ family trust and affiliated entities, the affidavit stated.
It also claimed hundreds of millions of dollars were transferred directly from First Brands to James or affiliated entities over a seven-year period, with the majority occurring between 2023 and 2025.
In some cases, Moore alleged, funds were received by First Brands entities arising from Evolution and Onset facilities on the same day that multi-million dollar transfers were made from those entities to James’ trust.
The company’s founder owns at least seven properties, including a home in the Hamptons, an extensive car collection “including at least 17 exotic cars”, and has spent hundreds of thousands of dollars on a personal trainer and private chef, the affidavit claimed.
James, Moore alleged, “was misappropriating hundreds of millions, if not billions, of dollars from First Brands”.
The filing reiterated that as of its bankruptcy date, First Brands owed creditors around US$6.1bn in on-balance sheet debt obligations, US$2.3bn in off-balance sheet financing, US$800mn in supply chain finance liabilities, and a further US$2.3b in factoring liabilities.
Update: This story was updated on November 4, 2025, to include a statement from Patrick James’ spokesperson that was received after press time.
