💥Fraud, Fees & Fire💥
Updates: First Brands Group LLC + ModivCare Inc.
⚡Update 2: First Brands Group, LLC⚡
Let’s just call it like we see it: this is a colossal clusterf*ck.
We’ve admittedly been lax in our post-filing coverage of First Brands Group LLC and its 111 affiliates (collectively, the “debtors”), all of which filed chapter 11 bankruptcies in the Southern District of Texas (Judge Lopez) back at the tail-end of September ‘25.
From day one, we weren’t keen on the cases. We went back to our inbox and pulled a note Johnny wrote on September 30, 2025 after reading CRO (now-CEO) Charles Moore’s first day declaration:
“Cap stack is a convoluted mess, and lots of couched phrasing to avoid what will obviously be fraud.”
💯, John-o.
On November 3, 2025, the debtors made the fraud official by suing former CEO Patrick James and a sh*tload of people and entities affiliated with him:
He denies the allegations, but that did nothing to stop the suits from piling on.
On January 9, 2026, the debtors roped in and separately sued Mr. James’ brother, Edward James — a former SVP and board member of the debtors — and purported fraudster-financier Onset Financial Inc.:
This Mr. James denies the allegations too.
But they already know they’re on borrowed time because, on January 29, 2026, the United States government unsealed its own criminal fraud indictment against the brothers James and — what’s this? — a guilty plea entered by former senior vice president of finance, Peter Brumbergs.
What did Mr. Brumbergs admit to? Falsifying financial statements. Inflating invoices. Double-pledging collateral. Congrats, Mr. Brumbergs …
He is not alone. A little over a month later, on March 2, 2026, former CFO Stephen Graham joined him, admitting guilt to four counts, expressly including bank and wire … here’s that word again … fraud. The two will testify against Patrick and Ed in an effort to right past wrongs minimize their own time in the slammer.
Regardless, actually-innocent investors and business counterparties stand to lose an unbelievable amount of cash, measured in the billions, and employees will take it straight on the chin.
Well, put more accurately, continue taking it straight on the chin. From March 3, 2026:
We can’t speak to Senator Bernie Moreno’s abilities, generally, but “scumbags” be apt as hell.
Oh, and those jobs? That’s just Ohio. Other states are feeling their share of pain too, including Texas:
And Indiana. And Illinois. And South Carolina.
We’ll stop listing states because we’d rather focus on something else: those not sharing in the pain. You know who they are: Weil, Gotshal & Manges LLP (“Weil”) and Alvarez and Marsal North America, LLC (“A&M”), the debtors’ legal counsel and financial advisor, and every other estate (or lender) advisor sucking at the teat of the debtors, all of whom are doubtlessly basking in and leaning into the madness.
Why? Any excuse is a good excuse to run the clock 24/7.
That, they have been doing in spades.
In the first ~three months of the cases, ending December 31, 2025, estate-retained professionals billed ~$146.4mm in docketed fees and expenses, most of which ($103.6mm or ~71%) were incurred by Weil and A&M.* For which the two firms invested ~4.6 years and ~5.7 years, respectively, of time — ~10.2 years in the aggregate — during a single 94-day period.**
What do they have to show for all the vigorous, hard work? Here’s a live shot of the current landscape:
OK, fine. It’s not entirely nothing. There’s … um …
📍Ongoing mediation. Judge Isgur, naturally.
📍An examiner, Boies Schiller Flexner LLP’s Martin De Luca, still hard at work sans any semblance of a report.
📍A total lack of cash — the debtors’ DIP lenders declined an invitation to torch another $700mm+ (on top of the $1.1b already burned), and the debtors have relied on Ford ($F) and General Motors ($GM) prepaying for inventory to keep them afloat.
📍An ongoing, yet twice-adjourned, sale process. Although, per Bloomberg:
“First Brands Group has four potential buyers for its remaining auto-parts factories — including operations that supply Ford Motor Co. — under a proposal aimed at preserving thousands of jobs as the bankrupt company tries to avoid shutting down and liquidating what’s left.
… and on Monday, March 10, 2026, the debtors announced “… the going-concern sale the Debtors’ Walbro[] business …” to the Active Dynamics Group-affiliated Overdrive Capital, LLC for the cash purchase price of … drum-roll please …
… $50mm cash.
Only ~$100mm to go before the debtors clear professional fees through December.
All the same, we’re sure at least a few employees of Walbro were happy to hear the news, which is scheduled to go before Judge Lopez on Friday, March 13.
📍Endless, maddening amounts of litigation while parties fight for scraps. Lender-on-lender, debtor-on-lender, lender-on-debtor. We don’t care to list it all — here’s the docket if you’re so inclined, although it extends beyond the docket too.
With little doubt, that’ll be what causes the dam to break. The debtors can’t afford to fight forever, and if we had to place our bets today, we’d put our money on this dumpster fire eventually being some chapter 7 trustee’s job to ultimately clean up.
*This doesn’t include prepetition fees and expenses, which came in much more reasonably (still high!) at ~$9.0mm (Weil), ~$4.3mm (A&M), and ~$867.5k (i-banker Lazard Frères & Co. LLC).
**And another example of the industry’s participants tightening a self-hung noose.
⚡Update 3: ModivCare Inc.⚡
Well sh*t. We might as well stay on theme here.
Back in December ‘25, ModivCare Inc. (“ModivCare”) and seventy affiliates (collectively, together with ModivCare, the “debtors”) drew near the confirmation hearing on their chapter 11 plan, which proposed to (i) term out the debtors’ DIP loans, (ii) give 98% of the equity to 1L claims, including those held by a group of DIP-lending consenting lenders (the “consenting creditors”), and, (iii) as a consolation prize, award 2% of the equity (+ warrants) to 2Ls and GUCs.
The official committee of unsecured creditors (the “UCC”), represented by White & Case LLP (“W&C”) and AlixPartners, LLP (“Alix”) objected. Of course. Litigation has been the UCC’s shtick from day one.
Way back in October ‘25, the consenting creditors, through the three-lawyer Houston firm Walker & Patterson, P.C. (“W&P”), forewarned Judge Perez via a scant reservation of rights (the “RoR”) related to W&C and Alix’s first fee statements and, simultaneously, foreshadowed drama to come:
“The Committee Advisors’ scorched-earth approach, undertaken notwithstanding their obligation to act in the best interests of unsecured creditors, is [] divorced from the real-world harm inflicted on the Debtors’ businesses. That harm, and the attendant costs, only serves to erode the Debtors’ going-concern value and push unsecured creditors even further out of the money.”
Anyway, the objection. The UCC argued that the plan didn’t work because the debtors’ midpoint valuation was too low; it needed to be upped by ~65% (~$545.5mm), flying in the face of every piece of evidence available, including market trading prices. Indeed, per the consenting creditors, “[a]s of October 2025, the First Lien Loans traded down to cents in the mid 40s, the Second Lien Notes traded down to 1.5 cents and the Subordinated Unsecured Notes reached less than 1 cent.”
Even then, Johnny didn’t think the objection stood a snowball’s chance in hell:
Perhaps too optimistic. Come the confirmation hearing, the court overruled it and, on December 15, 2025, entered the confirmation order. On December 29, 2025, the capital “P” plan went effective according to small “p” plan.
But during the doomed litigation, the UCC’s profs racked up an impressive amount of fees. Specifically, during their 111-day engagement, Alix ran up a ~$5mm tab, while W&C clocked in at …
… $14.2mm.
The reorganized debtors, now represented by W&P, couldn’t abide that.
On March 4 and 5, 2026, Walker Texas Ranger W&P threw a roundhouse kick with a🖕 on top at each of Alix and W&C (here and here) and objected to payment of any and all fees to either.
In addition to again complaining about the UCC’s pros overbilling the sh*t out of the estates, the W&C objection contains detail the RoR had been missing. Here’s W&P bringing the 🔥:
“Representatives of the Committee’s professional team, including Scott Greissman, a partner at White & Case, met in person with the Debtors and the Consenting Creditors and delivered an unequivocal demand. During this meeting, Mr. Greissman insisted that $30 million be paid to unsecured creditors and made clear that, absent such payment, the estate would incur comparable or greater sums in professional fees through sustained litigation…
The threat did not occur on a single occasion. Mr. Greissman had further phone conversations with counsel for the Consenting Creditors in which he reiterated the same demand…
The Committee’s professionals, White & Case and AlixPartners combined, generated nearly $20 million in fees and expenses in less than four months, while the unsecured creditors they were ostensibly protecting received a fraction of the $30 million initially demanded…
The fees were not a byproduct of vigorous but reasonable advocacy. They were the direct fulfillment of the threat made at the outset: if the $30 million was not paid to the class, the professionals would ensure that the money was extracted from the estate in fees.”
Is there truth to stick-up allegations? Is this a pattern? You be the judge.
We look forward to the replies and, 🤞, the in-court action, where presumably somebody will take the stand, 🍿.
*Per the reorganized debtors, “[a]s of October ‘25, the Debtors’ First Lien Loans traded at approximately 43.7 cents on the dollar, the Second Lien Notes at 1.4 cents, and the Subordinated Unsecured Notes at less than 1 cent.”
📚Resources📚
We have compiled a list of a$$-kicking resources on the topics of restructuring, tech, finance, investing, and disruption. 💥You can find it here💥.
📤 Notice📤
Ann Pichler (Director) joined Teneo from r2 Advisors LLC.
Bryan Uelk (Counsel) joined Skadden Arps Slate Meagher & Flom LLP from Milbank LLP.
James Scavone (Associate) joined Latham & Watkins LLP from Ropes & Gray LLP.
Jeremy Rosenthal (Principal) joined Rose Point Advisors from Force 10 Partners.
Luke Murley (Partner) joined Akerman LLP from Saul Ewing LLP.
Sachin Lulla (Managing Director, Head of Capital Solutions and Capital Markets Advisory) joined CMD Global Partners from Stephens.
Scott Safron (Managing Director) joined CR3 Partners from Huron Consulting.
🍾Congratulations to…🍾
AlixPartners LLP (David MacGreevey) for securing the financial advisor mandate on behalf of the official committee of unsecured creditors in the Saks Global Enterprises LLC chapter 11 bankruptcy cases.
Brown Rudnick LLP (David Molton, Jeffrey Jonas) and Caplin & Drysdale (Kevin Maclay, Todd Phillips) for securing the legal mandate on behalf of the official committee of unsecured creditors in the Vanderbilt Minerals, LLC chapter 11 bankruptcy cases.
Colin Moran on his promotion to Director at SierraConstellation Partners LLC.
Dentons US LLP (Lauren Macksoud, Andrew Helman, Henry Thomas, Kyle Smith, David Boydstun, Jr.) for securing the legal mandate on behalf of the official committee of unsecured creditors in the North Star Health Alliance, Inc. chapter 11 bankruptcy cases.
Emerald Capital Advisors Corp. for securing the financial advisor mandate on behalf of the official committee of unsecured creditors in the Francesca’s Acquisition LLC chapter 22 bankruptcy cases.
Houlihan Lokey Capital, Inc. (David Salemi) for securing the investment banker mandate on behalf of the official committee of unsecured creditors in the Saks Global Enterprises LLC chapter 11 bankruptcy cases.
Pachulski Stang Ziehl & Jones LLP (Bradford Sandler, Robert Feinstein, Shirley Cho) for securing the legal mandate on behalf of the official committee of unsecured creditors in the Eddie Bauer, LLC chapter 11 bankruptcy cases.
Roger Gorog on his promotion to Managing Director at SierraConstellation Partners LLC.