First Brands Creditors Assail Bankruptcy Plan as Funding Withers

First Brands Group LLC was met with broad skepticism from creditors over a “controversial” proposal to wind down in bankruptcy that relies on recovering funds through litigating fraud claims.

Creditors of the bankrupt auto parts maker, running low on cash to continue funding its Chapter 11 case, at a status conference Friday expressed doubt over the company’s pending bid to liquidate on its own terms and establish a set of post-bankruptcy trusts to provide recoveries for lenders and unsecured creditors alike.

Wracked by allegations of massive fraud, First Brands filed its bankruptcy plan April 28, seeking approval to initiate ...