*

Company alleges use of fake invoices, double-pledged

collateral

*

Accuses James of causing company to incur at least $2.3

billion

in liabilities

*

James supports fiduciary investigation into financial

practices

(Updates November 4 story with statement from James in

paragraphs 3-4)

By Devika Madhusudhanan Nair

Nov 4 (Reuters) - Bankrupt First Brands on Monday sued

its former chief executive and founder Patrick James, accusing

him of orchestrating frauds that left the U.S. auto parts maker

insolvent.

James enriched himself and his family by "misappropriating

hundreds of millions (if not billions) of dollars from First

Brands," the company said in a lawsuit filed with the U.S.

Bankruptcy Court for the Southern District of Texas.

A spokesperson for James said in a statement that James

"categorically denies the baseless and speculative allegations

contained in the First Brands complaint."

"Mr. James was given no opportunity to respond before the

complaint was filed and he intends to immediately challenge it.

Mr. James has always conducted himself ethically and is

committed to doing everything he can to support First Brands'

stakeholders during the restructuring process," the statement

said.

First Brands' bankruptcy has raised concerns about opaque

financing in the private credit market and cast a spotlight on

the exposure of some of the world's top financial institutions.

In its complaint, First Brands said James caused the company

to incur at least $2.3 billion in liabilities based, at least in

significant part, on non-existent or doctored invoices. It also

accused him of engaging in financing transactions involving

special-purpose vehicles that double-pledged collateral.

James transferred hundreds of millions of dollars from the

company to himself or entities affiliated to him between 2018

and 2025, with most of the transfers taking place from 2023 to

2025, First Brands added.

James stepped down as CEO last month.

The Ohio-based company, which makes filters, brakes and

lighting systems, has appointed a special committee of

independent directors to probe its off-balance-sheet financing.

On Monday, James filed a legal motion supporting the

appointment by the court of a fiduciary who would investigate

the company's financial practices leading up to the bankruptcy

filing.

First Brands filed for bankruptcy protection in September

after its lenders began investigating irregularities in the

company's financial reporting.