First Brands Group is seeking the expedited relief of $250 million it claims is being held up by customers and the bankruptcy process.
The move comes months after the company filed for bankruptcy and a lawsuit against its former CEO Patrick James for allegedly misappropriating millions of company dollars for personal gain.
First Brands Group filed for release of $250 million on Dec. 12, stating the bulk of these funds are tied to customer receipts for orders that have already been fulfilled but the company "has not been able to access to date."
The company argues these outstanding funds are "artificially impairing First Brands' true liquidity and cash flows, and causing unfounded concerns regarding the Company's financial position."
What led up to this point?
The auto parts manufacturing company filed for bankruptcy Sunday, Sept. 28, after disclosing more than $10 billion in liabilities , court filings show .
Bloomberg described the filing as "capping weeks of turmoil sparked by creditor concern over the auto-supplier's use of opaque off-balance sheet financing."
Off-balance sheet items are line items that aren't listed on a company's main balance sheet.
In November, the company filed a lawsuit against its founder and former CEO, alleging he "fraudulently secured billions of dollars of financing for First Brands" and then enriched himself and his family by misappropriating hundreds of millions of dollars from the company.
The complaint, filed in federal bankruptcy court in Texas, claims former CEO Patrick James manipulated financial statements and concealed debt to obtain financing that ultimately left the auto-parts supplier "insolvent and out of cash."
The company says if approved, the request for $250 million will add to its $1.1 billion in bankruptcy financing, giving it more cash to run the business and invest in growth.
Additionally, First Brands outlined several steps its taken to recover from its losses and legal battles with its former CEO.
The company reports ordering patterns trending above 90% of its pre-filing levels and revealed its hired an interim CEO, Charles Moore, with "deep automotive" and restructuring experience.
First Brands said it will continue working towards hitting target cost reductions, supply chain enhancements and business opportunities.
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