Who Really Killed First Brands, Part 4: How a Trillion-Dollar Firm Profited
Part 1 examined the destruction of First Brands, the indictment of its founder Patrick James.
Part 2 examined the federal prosecution and the cooperators on whom the government's case rests.
Part 3 examined Apollo Global Management, a trillion-dollar Wall Street firm with annual revenue, in recent years, of between $26 billion and $33 billion
Part 4
Apollo Golbal Management buys and sells companies, lends money to borrowers that traditional banks will not touch, and at higher interest rates, and trades positions in the debt of companies including positions that profit when those companies fail.
It bets in effect with other Wall Street firms on the debt and the future of companies it has chosen to study.
Study is what Apollo does best.
One of the companies it studied is First Brands, the now bankrupt American auto parts manufacturer that as recently as 2024 was generating $5 billion in annual sales.
On January 27, 2026, the US Attorney for the Southern District of New York indicted First Brands' founder, Patrick James, along with his brother Edward James, on nine counts including wire fraud, bank fraud, and the rarely used Continuing Financial Crimes Enterprise charge, known as the 'financial kingpin' statute.
The indictment alleges a multi-year scheme involving fake invoices, double-pledged collateral, and billions of dollars in financing obtained through misrepresentations.
The DOJ's press release accuses: 'Patrick James and Edward James perpetrated a yearslong fraud at First Brands, eventually bankrupting the global automotive company in September 2025.
This series presents an alternative theory: that First Brands' collapse was the result of Apollo Global Management's bet against the company, and the actors who profited from the destruction.
The Blacklist
It was not as if First Brands did not know Apollo's reputation.
By 2024, First Brands had placed Apollo on its list of firms not permitted to lend to the company or to see the confidential financial information lenders need to evaluate a loan.
Apollo somehow got past the blacklist. In 2024, Apollo's lending subsidiary Atlas SP came in as a prospective lender to First Brands and obtained access to the company's books.
The Inside Look
Atlas SP's review gave Apollo information about the company's borrowings, how cash flowed through the business, and the liabilities that were not visible in the company's ordinary financial presentations.
In most lending practices, this information is confidential and used only to evaluate the lending decision.
Apollo, however, is not just a lender. It is also an owner of companies and a trader in debt.
Apollo's lending team decides whether to lend. Apollo's private-equity team decides whether to buy a competitor. Apollo's credit trading team decides whether to bet against the company's debt.
Each team has access to the same information and upper management decides which way to profit.
When you have a trillion dollars of investors' money, you have options.
First Brands had only one: Manufacture American auto parts, while employing American workers.
For this reason, First Brands did not want Apollo to study it for lending
Apollo chose not to lend First Brands money but to bet against it in the debt market and, in addition, buy and invest in companies to compete against First Brands.
The Bet
Apollo decided to bet against First Brands paying its existing debts.
The strategy was clever. Apollo did not need to interfere with First Brands' operations. It needed to hold a position and wait.
If First Brands' debt weakened, Apollo would profit. If the market learned of Apollo's position, the position itself would become information that could weaken the debt.
Apollo paid millions in fees to one or more Wall Street firms on a bet that First Brands would default on its main debt.
In exchange, the other firm took the opposite side of the bet, agreeing to pay Apollo if First Brands defaulted.
At the time, the market saw First Brands as healthy. Its $2 billion loan was trading at 95 cents on the dollar. From the market's perspective, Apollo was betting against the consensus
If First Brands survived, which seemed likely, Apollo would pay millions in premiums and lose. If First Brands defaulted on its main debt, the other Wall Street gamblers would pay Apollo a very large amount of money.
These kinds of deals go on all the time on Wall Street. It is legal gambling.
It could be likened to a bank where depositors had no concerns. Then a major investor announces it is betting the bank will fail. The announcement itself becomes the reason depositors lose confidence and withdraw their money. The bet pays off because the bet was disclosed.
The payoff was asymmetric. Apollo would lose several million in premiums if First Brands survived. It would collect tens or possibly hundreds of millions if First Brands defaulted.
This gaming contract is called a credit default swap. Apollo did not have to lend, own, manage, or help or hurt First Brands.
It only had to keep paying the premiums and wait.
None of the gaming money went to First Brands. It was simply a bet between outside financial firms about whether First Brands would default. Apollo paid the premiums for at least a year.
The Competing Portfolio
While Apollo was betting against First Brands, it already owned and was acquiring companies that made the same kinds of auto parts First Brands made.
In November 2022, Apollo had closed its $7.1 billion acquisition of Tenneco, one of the world's largest auto parts manufacturers and a direct competitor to First Brands.
By the time Apollo studied First Brands' books in 2024, Tenneco was already in Apollo's portfolio.
Under Apollo's ownership, Tenneco closed multiple American plants and moved production to lower-wage countries. The Kettering, Ohio plant of 648 workers was shut down by December 2023 and the work moved to China and Mexico. The Sevierville, Tennessee plant of 242 workers closed in 2025. Over a thousand Tenneco American workers have lost their jobs under Apollo's ownership.
In November 2024, an Apollo-owned company called ABC Technologies announced the acquisition of TI Fluid Systems, a British-American auto parts maker headquartered in Auburn Hills, Michigan. The deal closed in April 2025 for approximately $1.8 billion. The combined company, renamed TI Automotive, made the same kinds of fluid systems and engineered plastic parts that First Brands made.
While Apollo was betting against First Brands, it owned two large competing companies.
The Bank Run
On Wall Street, investors buy and sell shares of large loans made to companies like First Brands. They are bought and sold the way stocks are.
Investors made trades on First Brands' $2 billion loan. In early September 2025, it was trading at 95 cents for every $1 the company owed. Investors were confident that First Brands would pay the loan back when due in 2027.
Then the Financial Times reported Apollo's large bet against First Brands — that the company would fail to pay back its $2 billion loan. How the Financial Times learned of Apollo's position is not in the public record.
Whoever leaked it, and of course the rumor is that Apollo did, it was market-moving information. When a trillion-dollar investment firm is publicly known to be betting against a company, lenders and investors reassess their own positions.
It worked like a reverse form of insider trading. Traditional insider trading uses non-public information to profit from a price increase.
Apollo's position, once publicly known, worked the opposite way. The disclosure of the bet became the information that moved the price in the direction the bet was on.
Within days of the story, the price of the loan dropped from 95 cents to the mid-eighties on the dollar.
Perception Rules Over Reality
If the behemoth Apollo was betting against First Brands, something was up. Something Apollo knew that was not publicly known.
That was the perception, and it only got worse.
More investors started selling. It was almost literally like a run on a bank.
The loan sold at lower and lower prices. By the end of September, the loan had dropped to 45.7 cents on the dollar. More than half its value was gone.
The price collapse did not change the $2 billion First Brands owed. The interest payments did not change. First Brands still owed the money.
But when a loan that weeks earlier was valued at 95 cents on the dollar now trades at 45 cents on the dollar, the market is pricing in default. Investors are saying what Apollo had bet on: First Brands would default.
The word on Wall Street was that First Brands was going down. It did not matter if it was true. A run on a bank or an abandoning of a company is not predicated on actual insolvency but on the perception of insolvency.
This is true for all stocks and for all of Wall Street. Perception rules over reality.
Apollo's disclosed bet shifted perception
First Brands was not a Wall Street firm. It was an Ohio auto parts manufacturer. It made products and employed Americans.
Apollo's bet, once disclosed, caused a ripple effect.
Lenders pulled back. No one wanted to extend credit to a company the market had decided was going down. The lines of credit First Brands had been using to pay suppliers and meet payroll dried up.
Suppliers began demanding payment up front. The cash First Brands needed to keep operating stopped flowing.
First Brands had customers and orders. It ran out of cash.
The Vulnerability
First Brands was a profitable company. It was also a heavily leveraged.
In 2024, First Brands produced about $5 billion in sales and $1.1 billion in operating profit.
First Brands was carrying $6.1 billion in debt on its balance sheet, plus another $3 billion or more in off-balance-sheet financing through factoring and supply-chain finance arrangements.
The company was paying $900 million a year in interest and principal on the debt. That was 80 percent of its operating profit. After debt service, the company still had approximately $200 million in surplus.
But the high leverage structure could only work as long as lenders kept lending to the company. When the lenders pulled back, the cash flow broke the company.
First Brands' financing depended on lender confidence. Apollo's bet destroyed the confidence. The company collapsed.
The Exit
Apollo made money from First Brands' collapse. How much we don't know.
The Financial Times described Apollo's bet against First Brands as large enough to move the market once it became known. A position of that size could have generated anywhere from tens of millions to possibly hundreds of millions.
The credit default swap profit may have been the smaller part of Apollo's gain. Apollo also owned Tenneco and TI Automotive, two companies positioned to absorb First Brands' market share.
The benefit to those companies from First Brands' disappearance was possibly worth billions.
For Apollo's competing portfolio to fully benefit, First Brands needed more than bankruptcy.
The Indictment
Four months after First Brands' bankruptcy filing, federal prosecutors in Manhattan indicted Patrick James on nine counts, including the "financial kingpin" charge. He faces 20 to 30 years in federal prison.
The trial is scheduled for February 2027.
Two Connivers
It is not that there is no evidence of potential wrongdoing, though it appears to be misplaced.
We will get into this more later, but for the sake of disclosure, First Brands had two connivers who, during the desperate times and maybe before, did some dubious dealings.
To save their skins, the two who did suspicious deeds have become cooperators. They are Stephen Graham and Peter Andrew Brumbergs.
Graham is the former Chief Financial Officer of First Brands. Brumbergs is the former Senior Vice President of Finance.
These two controlled the financing, and they admitted they did some conniving that was borderline or outright fraud.
Brumbergs pled guilty on January 27, 2026. The indictment of Patrick James was unsealed two days later.
Graham pled guilty on March 2, 2026, signing his cooperation agreement on February 25.
Both men have agreed to testify against James at the February 2027 trial in return for leniency in their sentencing.
The defense theory is that their tricky-to-illegal moves was done without James's knowledge.
They lied about the finances. The prosecution argues that James directed the scheme. The problem with the government's theory is the documentary evidence. The two connivers signed the false documents and had a hand in every deceitful or semi-deceitful lie told.
Financing was their job.
James' name does not appear on the fraudulent documents that have been made public.
Saving the Ship
Maybe the connivers Graham and Brumbergs were just trying to save the ship — a ship under heavy attack — just as they are now trying to save their own skins by blaming James.
Maybe the real crime was not their fudging and lying about the company to short term lenders as it was going up in flames, but the perfectly legal and brilliantly executed bet against First Brands that drove these men to try to save the company and save their high-paying jobs.
The evidence shows they kept it hidden from James, who was out front fighting to make the company more profitable, keeping the factories moving toward output and sales.
Keeping the jobs of 6,000 American workers.
Arguably, James was not watching the wheeler-dealers Graham and Brumbergs, the finance whiz kids, as they scrambled in the engine room of a sinking ship.
That is what the evidence shows: The two cooperators left a chain of incriminating emails that is, ironically, the foundation of the government's case against James.
James himself wrote no such emails.
A later installment in this series will focus on these two cooperators in depth — their emails, their plea agreements, the credibility questions, and the structural fact that they are the authors of the very communications the government relies on, while James himself wrote nothing incriminating.
But that comes later. Now we return to Apollo and its connections.
The Prosecutor
The prosecutor's office that brought the indictment is led by US Attorney Jay Clayton. Until April 2025 — five months before First Brands filed for bankruptcy — Clayton was chairman of Apollo's board of directors.
He left Apollo when Trump appointed him interim United States Attorney for the Southern District of New York.
So to be clear: the former chairman of Apollo, the firm that bet against First Brands, is now the head of the prosecutor's office that indicted Patrick James.
A trillion dollars can get you a lot of influence.
The Promotion
And, potentially, a promotion too.
On June 11, 2026, President Trump nominated Clayton, the former Apollo chairman who has been serving as US Attorney, to become the Director of National Intelligence. The Senate Intelligence Committee scheduled his confirmation hearing for June 17.
If confirmed, Clayton will leave the Southern District of New York to oversee the United States intelligence community.
By the time the James case reaches trial in 2027, Clayton will likely be in a more senior role at a higher level of government.
He continues to hold Apollo stock worth between $1.5 million and $6 million.
The Picture
Meanwhile, First Brands is bankrupt. Its 17 American factories are closed. Four thousand of its American workers have lost their jobs. Its brake rotor foundry — the last foundry in America making aftermarket rotors — was auctioned for scrap.
Its brands were sold off or shut down. Twelve of them, including FRAM, Autolite, and Trico, were sold to a private-label filtration supplier, PGI Northstar, for $25 million.
Raybestos, Centric, and StopTech were shut down for good.
And James, the Malaysian-born immigrant who became an American citizen and spent decades building factories in America, reviving American auto parts brands, faces the possibility of spending the rest of his life in prison.
The Question
Now meet another interested player.
Before the bankruptcy filing, with cash drying up, Patrick James hired the restructuring firm Alvarez and Marsal to help him prepare the company for bankruptcy.
He gave A&M access to the company's books, operations, and strategic plans.
After the bankruptcy filing, James was forced out by the senior lenders. The court approved A&M's continued role. Charles Moore, the A&M partner James had brought in to help him, became interim CEO.
Under Moore's management, First Brands was dismantled rather than restructured.
There are questions:
Did Apollo communicate with Alvarez and Marsal before or during the bankruptcy process?
Did Apollo have any communications with federal prosecutors concerning First Brands or Patrick James?
Apollo's financial interests aligned with First Brands' destruction. They did not align with restructuring, which was supposed to be the purpose of bankruptcy.
A reorganized First Brands emerging from Chapter 11 with its factories and customer relationships intact would have remained a competitor to Apollo's Tenneco and TI Automotive.
The dismantling removed that threat.
Alvarez and Marsal's economic interests aligned with a bankruptcy that was long, complicated, and dramatic. A&M collected millions in fees that grew as the case continued.
A quick, honest restructuring would have ended the engagement in months.
Under A&M's management, First Brands was destroyed, even if lenders got stiffed to the tune of billions.
The federal prosecution closed the last door. No strategic buyer will acquire a company at the center of an active criminal case. The indictment ensured that First Brands could not be reassembled.
Each actor acted in its economic interest. Each interest pointed in the same direction. The effect was the extinction of an American manufacturer that had been profitable the year before.
Part 5 is about the men who came after Apollo. They took control in bankruptcy. They profited from the wreck.
Part 6 will be about the two cooperators. Desperate then, they seemed to have lied to keep their jobs. Desperate now, the question is whether they will lie to keep their freedom.
In a sense, they are fall guys trying to make James the fall guy.
Apollo will likely earn billions between now and the trial as its former chairman oversees the United States intelligence community.
A trillion dollars can go a long, long way.
By Frank Parlato What Was Lost First Brands, a Cleveland-based auto parts company, went into bankruptcy last year. It employed 26,000 people on five continents. About 6,000 of those workers were Americans in Midwestern factories. The other 20,000 were in China, Mexico, Europe, an