First Brands Group, parent company of Champion Laboratories and Luberfiner in Albion, is considering filing for Chapter 7 bankruptcy for some of its auto parts units after its founders were charged in federal court with wire fraud and money laundering.
Industry observers reported that First Brands may liquidate certain manufacturing facilities through the Chapter 7 bankruptcy process, even as the company currently attempts to reorganize under Chapter 11. The criminal prosecution of founders Patrick and Edward James has further complicated the company’s efforts.
Concerns over supply chain disruptions have spread to major automakers. Last week, officials from Ford and General Motors held an emergency meeting to assess how the potential collapse of First Brands could affect their operations. While First Brands primarily serves the aftermarket, it also manufactures original equipment for American car manufacturers.
First Brands filed for bankruptcy protection in September of last year. Plans remain in place to sell all or parts of the company through an auction, with the process expected to conclude by the end of March.
Since the bankruptcy filing, only one unit—Brake Parts, Inc. in McHenry, Illinois—has been shut down, resulting in 389 job losses. The company’s troubles have also affected Champion Labs in Albion, where shift cancellations and furlough notices have impacted many employees. The bankruptcy proceedings are being handled through the U.S. Bankruptcy Court for the Southern District of Texas in Houston. No word yet on the future of the Albion plant.