First Brands Group appointed BDO as its auditor, citing the firm’s “less rigorous” audit style, a former senior employee told the court‑appointed examiner. The auto parts maker’s abrupt September bankruptcy sent shockwaves through U.S. credit markets, where it had secured roughly $12bn in financing. Fraud charges now loom over founders Patrick and Edward James, who have pleaded not guilty.

The examiner’s preliminary report, filed by Martin De Luca, argues that BDO’s audit was “the most unsophisticated” among larger firms, allowing First Brands to maintain dual books and conceal off‑balance‑sheet debt. Witnesses said BDO relied heavily on remote work, never accessed core systems like Oracle or SAP, and skipped key checks such as customer confirmations and cash‑flow analysis, potentially missing fraudulent financing red flags.

BDO refutes the claims, noting the examiner never interviewed its staff or examined audit files and calling the conclusions “inappropriate” and based on hearsay. The firm maintains its audits for 2020‑2024 complied with professional standards. With First Brands’ estate now under restructuring advisers, the probe’s “preliminary” status leaves open the possibility of further scrutiny into the auditor’s knowledge and conduct.