The U.S. Department of Justice is pursuing $286 million in unpaid tariffs and penalties from First Brands Group, the former parent company of Champion Labs in Albion, according to recent filings in a Delaware bankruptcy court.
Federal prosecutors allege that First Brands Group deliberately undervalued goods imported from China in order to reduce its tariff obligations. Court documents state that, even as manufacturing costs rose worldwide and customer prices increased by double digits, First Brands reduced the transfer prices reported to U.S. Customs and Border Protection for products brought in through its Brake Parts and Centric Parts divisions.
According to the filings, the company lowered the declared values of these imports by approximately 32 percent, resulting in significantly reduced tariff payments. Prosecutors further assert that, after more than a year of underreporting customs values, First Brands paid a Chinese subsidiary a $40 million lump-sum payment in early 2022 to compensate for the lower transfer prices—a payment on which no duties were paid.
The ongoing tariff dispute adds further complexity to First Brands’ bankruptcy proceedings in Delaware, where creditors are actively filing claims against the company. Among them is Yellow Freight, a trucking company that transported Champion Labs products from Albion and is now seeking $5.5 million in unpaid bills.
The Justice Department’s claim represents one of the largest financial challenges currently facing First Brands Group as bankruptcy proceedings continue.