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First Brands Group’s chief executive may step down from the bankrupt car parts maker as lenders push for his removal in the face of mounting losses on billions of dollars in debt, according to people familiar with the matter.

A spokesperson for Patrick James said the First Brands founder was considering “relinquishing his role” atop the embattled group in response to questions from the Financial Times.

“Patrick James has always put the interests of First Brands Group ahead of his own and is evaluating his best path forward to help maximise value for its customers, suppliers, employees and lenders,” the spokesperson said.

The potential departure of James would cap a tumultuous few weeks for the low-profile executive, whose company has borrowed from some of the biggest institutions on Wall Street to finance a breakneck acquisition spree.

Its swift collapse has prompted an inquiry from the US Department of Justice, the Financial Times reported earlier this week. Federal prosecutors are in the early stage of looking into alleged financial irregularities.

James could be pushed out in the coming days, one of the people noted. The company is at the mercy of its lenders to fund its operations through bankruptcy.

Creditors have agreed to lend $1.1bn to stabilise the company’s business through bankruptcy, capital that is contingent on First Brands hitting milestones. Advisers to the company estimate it will burn through more than $900mn between its filing for Chapter 11 bankruptcy protection in September and late December.

James’ brother, Edward, stepped down from his senior role at the company, the people said.

Charles Moore, an executive from turnaround advisory firm Alvarez & Marsal, took the reins as chief restructuring officer as part of the bankruptcy. Stakeholders kept Patrick James in place for his co-operation during what has been a chaotic sprint to file for bankruptcy protection and keep the business operating, the people said.

A First Brands representative declined to comment. Alvarez did not respond to a request for comment.

Michael Baker, who served as First Brands’ chief corporate strategy officer, has also stepped down, said people familiar with the matter. His LinkedIn profile shows his work in the position ended in September. Baker joined First Brands in 2021 from law firm Paul Hastings, where he had served as a partner for a decade.

First Brands’ rapid downfall alongside the collapse of subprime car lender Tricolor at the start of the month has raised concerns of significant losses for some of the best-known players on Wall Street, as well as the potential for a wider fallout across debt markets.

The company, which makes Michelin-branded windshield wipers in Europe and Carter fuel pumps in the US, has amassed nearly $12bn of debt and off-balance sheet financing. Its roughly $5.5bn of term loans is now quoted at cents on the dollar, with an implied loss of more than $4bn.

The company was also a heavy user of off-balance sheet financing, selling customer invoices at a discount to funds owned by units of the investment bank Jefferies, Swiss bank UBS and Katsumi Global, a financing company owned by Japan’s Mitsui & Co and Norinchukin Bank.

One of its lenders earlier this week claimed as much as $2.3bn has “simply vanished”, and First Brands’ advisers said they are unable to locate the related collateral.

Meanwhile, BlackRock and Morgan Stanley have sought to redeem their stakes in a Jefferies fund that extended $715mn in credit to First Brands’ customers, said people familiar with the matter. The redemption requests were reported earlier by Bloomberg.

Morgan Stanley, BlackRock and Jefferies declined to comment.

In the 2000s, James, 61, acquired industrial businesses, including Columbus Component Group, an Indiana-based car parts manufacturing business. After several of these companies experienced financial difficulties during the 2008 financial crisis, James and other companies linked to him were sued by two lenders alleging fraudulent conduct had exacerbated their losses. James denied the allegations and the cases were dismissed after they ended in settlement.

James established Crowne Group, which in 2014 acquired Michigan-based Trico Products, a manufacturer of windscreen wipers. The combined group then pursued further debt-funded acquisitions, rebranding as First Brands Group.

Edward James played a key role in raising First Brands’ invoice and inventory financing, according to several specialists in the area who said they met with him to negotiate loans.

First Brands described Edward James as having held various roles at the company including in “finance, accounting and working capital solutions”, in a 2023 filing with the Securities and Exchange Commission.

Additional reporting by Sujeet Indap, Kate Duguid and Joshua Franklin in New York