Federal Trustee Seeks Control of First Brands Liquidation to Cut Costs

Key Details The U.S. Trustee has filed a motion in court requesting that First Brands Group be converted to Chapter 7 liquidation under court-supervised trusteeship. Federal officials argue a trustee can complete the asset liquidation at a fraction of current costs. The company has already paid out at least $245 million in advisory fees to its restructuring team. Why It Matters First Brands, buried in billions of dollars in debt it cannot repay, filed for bankruptcy last year following massive fraud allegations. The company abandoned reorganization efforts earlier this year when lenders refused additional funding due to concerns that collateral was tied to alleged fraudulent activity. Current advisers include law firm Weil Gotshal and Manges and financial adviser Alvarez & Marsal. What's Next If approved, the trustee would replace the current restructuring team and focus on monetizing First Brands' remaining major assets - primarily litigation claims against former company insiders and others. The fees paid to date include approximately $77.8 million to the main law firm alone through March. Should the transition occur, creditors may recover more funds by eliminating high-priced advisory expenses typical in large corporate bankruptcies.