Bankrupt auto parts supplier First Brands Group is set to wind down after a federal judge rejected its proposed Chapter 11 liquidation plan and ordered the case converted to a Chapter 7 liquidation.

U.S. Bankruptcy Judge Christopher Lopez of the Southern District of Texas rejected First Brands’ plan Aug. 24, finding that it was not feasible, including because it would defer payment on at least $222 million of administrative debts accumulated during the bankruptcy process.

First Brands had proposed creating a litigation trust that would pursue potentially billions of dollars in claims against former executives, lenders and other parties, with recoveries used to repay creditors. The company’s advisers estimated that litigation could recover about $2 billion by the end of 2028.

Under Chapter 7, a court-appointed trustee will instead oversee the liquidation of First Brands’ remaining assets and administration of creditor claims.

The ruling marks the latest turn in the collapse of what had been one of the largest independent automotive aftermarket parts suppliers. First Brands filed for Chapter 11 protection in September 2025 with more than $9 billion in liabilities and only about $12 million in cash, according to federal prosecutors. The company reported approximately $5 billion in annual worldwide sales before its bankruptcy.

First Brands’ portfolio included well-known aftermarket brands such as FRAM, Raybestos, TRICO, Autolite, Cardone, Centric Parts and Reese, spanning brakes, filters, spark plugs, wipers, pumps, lighting, towing products and other automotive components.

At the outset of its restructuring, lenders committed $1.1 billion in debtor-in-possession financing, including $500 million made immediately available to maintain operations. First Brands later shifted toward selling its businesses and assets after efforts to stabilize the company deteriorated.

The bankruptcy has also become intertwined with a federal criminal investigation. In January, prosecutors charged First Brands founder and former CEO Patrick James and former senior executive Edward James with multiple fraud offenses. Prosecutors allege they operated schemes involving fake and inflated invoices, double- and triple-pledged collateral, concealed liabilities and misleading financial statements to obtain billions of dollars in financing. Both men are presumed innocent unless proven guilty.

First Brands’ asset sales during Chapter 11 generated only a fraction of the company’s outstanding obligations, ultimately leaving the proposed litigation recoveries as a key component of its planned creditor repayments.

With Lopez rejecting that approach, the Chapter 7 conversion will bring First Brands’ remaining operations toward a final wind-down.