FRAM Air Filters’ Parent Company Claims Its Founder ‘Pilfered’ At Least $700 Million

I don’t have a good photo of First Brands founder Patrick James, mostly because he allegedly doesn’t like to get his photo taken. That’s understandable, but it’s far from the worst thing he’s been accused of doing. A new lawsuit by his former company suggests James pilfered at least $700 million, although the amount unaccounted for is more than $1 billion.

When The Morning Dump talks about billions of dollars, it rarely involves individuals. It’s usually companies, like Ferrari, that saw earnings rise in spite of weaker sales in China and tariffs. Both are weighing heavily on Ford CEO Jim Farley, who explained the difference between the threat of China now and the threat of Japan back in the day.

Bentley is calling its newest car the world’s first “Luxury Urban SUV.” Is that true?

The Patrick James Movie Will Be Interesting

When I was at SEMA a couple of years ago, I was impressed by how many different well-known auto parts companies were suddenly under a single company known as First Brands. Some of these are merely licensing deals (First Brands Group doesn’t own Michelin, but it does make Michelin-branded wiper blades under license), but the company has quickly and quietly collected a ton of companies, including FRAM, Trico, and Raybestos.

Thomas wrote about this in September, but the company had to file for Chapter 11 after it was discovered that the company had giant liabilities that dwarfed the company’s assets. More is coming out, including a lawsuit from the company itself, via Bloomberg, which makes this jaw-dropping claim:

Lawyers for the company — now run by restructuring consultants at Alvarez & Marsal — alleged that James borrowed funds on fraudulent terms, only then to “routinely and regularly” divert cash for himself and his family, according to a Southern District of Texas filing dated Nov. 3. More than $700 million was funneled from First Brands directly to James and his affiliated entities from 2018 to 2025, they claimed.

James “secretly pilfered some of the Company’s assets to fund his and his family’s lavish lifestyle. In short, he lined his pockets at the expense of First Brands and its creditors,” according to the document. The plaintiffs drew on data from more than seven million documents, as well as bank records and a collection of devices from employees.

In the 35-page document, lawyers paint a picture of James’ luxuriant spending habits, pointing to a fleet of at least 17 “exotic cars” and a celebrity personal trainer. In some cases, payments to James and his family were made directly from First Brands accounts, including at least $3 million in rent paid over 2019 to 2024 for a New York townhouse and about $500,000 paid to a private chef in 2025.

That’s a lot, but even $700 million isn’t the total amount that’s unaccounted for in the bankruptcy. First Brand Groups utilized the private credit market to borrow, and allegedly asked for delayed payments from customers, then turned around and used those invoices as a way to borrow more money to buy more companies, and, well, it didn’t work out.

The Wall Street Journal had a big piece on this, and it gets a bit into how the somewhat reclusive James built his empire:

First Brands would often provide products to customers on delayed-payment terms, and then pledge the accounts receivables to outside investors that provided the company with financing. The extent of these arrangements, which wasn’t disclosed until the bankruptcy, grew over time into several billion dollars of off-balance-sheet debt.

Over the years, several business partners sued James over his financing arrangements, alleging misleading and fraudulent practices.

A 2009 lawsuit filed by a creditor alleged that James made representations and omissions that gave a “false understanding of those companies’ financial strength and the value of the collateral securing the loans.” In a court filing, James’s lawyer said “any supposedly fraudulent activities conducted by James, which James denies, were undertaken with the full knowledge and consent of Plaintiff.” James later settled the case, and the terms weren’t disclosed.

The companies are still operating under Chapter 11 rules, so there’s no immediate concern about a run on air filters.

Ferrari Is Still Doing Fine, Thank You Very Much

I mentioned last month that Ferrari has made itself somewhat immune to the whims of the market by rebuilding itself as a luxury and sports brand. The company’s Q3 filings seem to support this, per Reuters:

Luxury sports-car maker Ferrari said on Tuesday its core earnings rose 5% in the third quarter, above expectations, thanks to a strong pricing power supported by models such as the SF90 XX and 12Cilindri, as well as increased personalisations.

The Italian company said its earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to 670 million euros ($781 million) in the July-September period, topping an analysts’ consensus of 649 million euros in a Reuters poll.

Must be nice.

Ford CEO Explains The Difference Between China And Japan

Ford CEO Jim Farley sat down with CBS Sunday Morning (link here), and I missed it, but this quote that the Detroit Free Press pulled is interesting:

During the interview, the topic of Japan’s domination of the U.S. auto market in the 1980s came up as a comparison to the threat of China’s EVs coming to the U.S. It’s a topic Farley is not shy to address, but this time he gave a new warning beyond his past comments, characterizing Chinese cars as an “existential threat.”

“They have enough capacity in China with existing factories to serve the entire North America market, put us all out of business,” Farley said on the show. “Japan never had that so this is a completely different level of risk for our industry.”

I think that’s a good point. A mixture of protectionist policies, like the Chicken Tax, and Japan’s lack of a centrally planned economy meant it was never in an immediate position to swamp the United States in the same way.

Behold, The Luxury Urban SUV

Bentley already teased its smaller electric SUV when it showed the rather attractive and pleasingly weird Bentley EXP 15 concept. Now Bentley has come out and announced more details:

Streamed live from the Bentley Motors factory in Crewe, and the future production line of its next all-new car, the world’s first Luxury Urban SUV, Chairman and CEO, Dr. Frank-Steffen Walliser, alongside members of the Bentley board will give a special presentation on Wednesday 5 November at 16:30 GMT. The online briefing, five years to the day of Bentley’s first Beyond100 strategic announcement,  promises to include further details of Bentley’s first fully-electrified product along with further strategic updates including a limited production new model coming this year.

Huh.

What I’m Listening To While Writing TMD

Hey, it’s Robert Earl Keen doing “Feelin’ Good Again” live. That’s not a bad way to start the day.

The Big Question

What’s a good example of a Luxury Urban SUV? This feels like a thing that exists.

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