UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION In re: COLLINS & AIKMAN CORPORATION, et al.

, Debtors. ) ) ) ) ) ) ) ) Chapter 11 Case No. 05-55927-R (Jointly Administered) Tax Identification No. 13-3489233 Hon. Steven W. Rhodes

OBJECTION OF CLARION CORPORATION OF AMERICA TO FIRST AMENDED JOINT PLAN OF COLLINS & AIKMAN CORPORATION AND ITS DEBTOR SUBSIDIARIES Clarion Corporation of America (Clarion) hereby files this objection (the Objection) to the First Amended Joint Plan of Collins & Aikman Corporation and its Debtor Subsidiaries (the Plan). In support of the Objection, Clarion states as follows: BACKGROUND 1. On May 17, 2005 (the Petition Date), Collins & Aikman Corporation and

several of its affiliates (collectively, the Debtors) filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code. 2. On January 24, 2007, the Debtors filed their Amended Disclosure Statement for

the First Amended Joint Plan of Collins & Aikman Corporation and its Debtor Subsidiaries (the Disclosures Statement), which this Court approved on February 9, 2007. 3. The Disclosure Statement provides that certain Causes of Action (as defined by

the Plan) will be transferred to, and preserved for the benefit of, the Litigation Trust (as defined by the Plan). (Disclosures Statement at I.G.1.) The persons against whom such Causes of Action may be brought are set forth on Exhibit A to the Plan. (See Plan, Ex. A.). Neither the

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Plan nor Exhibit A to the Plan identifies (i) the nature of the causes of action against the potential defendants, or (ii) the specific Debtor holding the Cause of Action. See id. 4. Sometime after February 9, 2007, the Debtors sent a copy of a Notice to Parties to

Retained Causes of Action (the Notice). The Notice provided that Clarion was a non-released party potentially subject to numerous generic causes of action, including: Causes of Action for payments, deposits, holdbacks, reserves or other amounts owed by any creditor, lessor, utility, supplier, vendor, insurer, surety, factor, lender, bondholder, lessor or other party - Contract, tort or equitable Causes of Action that may exist or subsequently arise - Causes of Action arising or permitted under chapter 5 of the Bankruptcy Code or applicable state law, including preferences under section 547 of the Bankruptcy Code and fraudulent transfers 5. Upon receipt of the Notice, Clarion undertook an internal investigation to

determine the nature of its relationship with the Debtors. According to Clarions records, it has absolutely no connection to any of the Debtor entities, and to the best of its knowledge, Clarion has never engaged in business dealings with any of the Debtors. Furthermore, the Debtors did not list Clarion as holding a claim against one of the Debtors on the Debtors numerous schedules. The Debtors also did not list Clarion as the recipient of a transfer within the ninety (90) days or one (1) year prior to the Petition Date as required by statement 3 of the Debtors numerous statements of financial affairs. Finally, Clarion has not filed a proof of claim or otherwise appeared in the Debtors bankruptcy cases up to this point. The only apparent nexus between Clarion and the Debtors is that Clarion is listed on Exhibit A to the Plan. 6. Clarion, through its attorneys, requested that the Debtors inform it of the nature

of the Cause of Action against Clarion as well as the Debtor entity holding such Cause of Action.

The Debtors have flatly refused to provide any such information, and have indicated that they have no obligation to do so.1 OBJECTION 7. Section 1129 of the Bankruptcy Code provides, among other things, that in order

for a bankruptcy court to confirm a plan, the plan must be proposed in good faith and not by any means forbidden by law. 11 U.S.C. 1129(a)(3). Because the Debtors have included Clarion, and most likely others, on Exhibit A to the proposed Plan for no apparent reason, Clarion submits that the Debtors have not proposed their plan in good faith.2 8. As a debtor in possession, the Debtors are subject to the duties and obligations of

a Chapter 11 trustee. 11 U.S.C. 1107(a). Chapter 11 trustees are required to, among other things, perform the duties of a trustee as specified in section 704(7) of the Bankruptcy Code. 11 U.S.C. 1106(a)(1). Section 704(7) requires a trustee to furnish such information concerning the estate and the estates administration as is requested by a party in interest, unless the court orders otherwise. 11 U.S.C. 704(7); see also In re Refco, Inc., 336 B.R. 187, 193-94 (Bankr. S.D.N.Y. 2006) (recognizing duty of trustee to provide information is extensive). Therefore, upon request of parties such as Clarion, the Debtors have a duty to provide information concerning the Debtors estates and their administration. 9. The Debtors refusal to provide information responsive to such a reasonable

request under the circumstances suggests that the Debtors are not fulfilling the duties imposed

It is unfortunate that Clarion has been forced to file this Objection simply to obtain answers from the Debtors to two simple questions. Clarion can now relate, at least in part, to the frustrations set forth by Third Avenue Value Fund and the United States Trustee in their requests for the appointment of a fee examiner. Clarion does not object to the disclosure of Causes of Action on Exhibit A to the Plan, as Clarion is well aware of the Debtors need to preserve causes of action in accordance with Browning v. Levy, 283 F.3d 761 (6th Cir. 2002). Rather, Clarion would simply like to learn the basis for its inclusion on Exhibit A.
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upon them by the Bankruptcy Code.3 Such conduct leads to an inference that the Debtors have failed to diligently investigate whether a Cause of Action does in fact exist against Clarion. Based on Clarions conversations with the Debtors through their respective counsel, it appears that the Debtors may have arbitrarily included certain parties on Exhibit A to the Plan without first conducting an investigation. Clarion hopes this is not the case, but based on the Debtors responses, cannot conclude otherwise. 10. Clarion therefore objects to the Debtors Plan as not being proposed in good faith.

Clarion intends on propounding discovery on the Debtors, as the Plan and this Objection constitute a contested matter pursuant to Rule 9014 of the Federal Rules of Bankruptcy Procedure. 11. Clarion expects that, as opposed to simply providing the requested information,

the Debtors will unnecessarily devote resources to this issue in their omnibus reply to objections to the Plan, despite the fact that Clarion will withdraw this Objection upon receipt of the requested information. 12. Clarion reserves its right to amend this Objection to include other objections to

the Plan, including, but not limited to, an objection to the third party release provisions in violation of In re Dow Corning Corp., 280 F.3d 648 (6th Cir. 2002). Finally, Clarion reserves its rights with respect to claims against the Debtors for breach of their fiduciary duties in violation of the Bankruptcy Code and other applicable law.
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Clarion understands that the duty to furnish information certainly has limits, especially where production of such information would be unduly burdensome on a debtor. However, in this case, Clarion is simply seeking information to which the Debtors already have access because such information was necessary in order for the Debtors to prepare Exhibit A to the Plan. Furthermore, to the extent that one of the Debtors holds a Cause of Action subject to the limitations period set forth in section 546 of the Bankruptcy Code, the Debtors will need to file an adversary proceeding in approximately two (2) months time or forfeit the right to pursue such Cause of Action. The Debtors are most likely currently preparing to file adversary proceedings against those parties listed on Exhibit A to the Plan, including Clarion. Therefore, providing the requested information to Clarion places no undue burden on the Debtors or their estates.

WHEREFORE, Clarion respectfully requests that this Court enter an order (i) denying confirmation of the Plan, and (ii) granting such other and further relief as the Court may deem just and proper. Dated: March 15, 2007 Respectfully submitted, CLARION CORPORATION OF AMERICA

By: John T. Gregg (P68464) BARNES & THORNBURG LLP 300 Ottawa Avenue, Suite 500 Grand Rapids, Michigan 49503 Telephone: (616) 742-3930 Facsimile: (616) 742-3999 Attorneys for Clarion Corporation of America

/s/John T. Gregg One of its Attorneys

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