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In re: COLLINS & AIKMAN CORPORATION, et al., Debtors.

Chapter 11 Case No. 05-55927 (SWR) Jointly Administered

OBJECTION BY SHAWMUT CORPORATION TO CONFIRMATION OF THE FIRST AMENDED JOINT PLAN OF COLLINS & AIKMAN CORPORATION AND ITS DEBTOR SUBSIDIARIES Shawmut Corp. (Shawmut) hereby objects to confirmation of the First Amended Plan of Collins & Aikman Corporation and its Debtor Subsidiaries (the Plan). INTRODUCTION 1. On May 17, 2005 (the Petition Date), Collins & Aikman Corporation and its

debtor subsidiaries (the Debtors) filed petitions for relief pursuant to Chapter 11 of Title 11 of the United States Code (the Bankruptcy Code). 2. The Disclosure Statement submitted to the Court in support of the Plan was

approved on February 9, 2007. The current deadline for objection to confirmation of the Plan and for submission of all balloting materials relating to the Plan is May 7, 2007. BACKGROUND 3. 4. 5. Shawmut is a supplier to the Debtors. Shawmut is also a customer of the Debtors. As of the Petition Date, Shawmut owed the Debtors $426,954.48 for products

purchased from the Debtors (the Due to Debtor Obligation). As of the same date, the Debtors




owed Shawmut $431,124.15 for goods ordered and shipped to the Debtors prior to the Petition Date (the Due from Debtor Obligation). These due to/due from claims offset each other, leaving Shawmut with a right of setoff equal to $426,954.48 and an unsecured claim of $4,169.67. 6. As a result of these offsetting obligations, Shawmut maintains a right of setoff

that is preserved by Section 553 of the Bankruptcy Code. See 11 U.S.C. 553(a) ([the Bankruptcy Code] does not affect any right of a creditor to offset a mutual debt). 7. Shawmut timely filed its proof of claim against the Debtors asserting its setoff-

secured claim in the amount of $426,954.48 and an unsecured claim in the amount of $4,169.67. 8. Shawmuts setoff-secured claim of $426,954.48 is an Other Secured Claim as

that term is defined in Sec. I.A.94 of the Plan. 9. Unless and until Shawmuts Other Secured Claim is objected to, and Shawmut

does not believe any grounds for objection exist, Shawmuts Other Secured Claim is an Allowed Other Secured Claim. Plan Sec. I.A.4 and 5. Allowed Other Secured Claims are in Class 1 and are unimpaired. Plan Sec. III.B.1. 10. No objection to Shawmuts setoff-secured claim has been filed as of the date of

this objection. However, if there is an objection to Shawmuts Other Secured Claim and the setoff right by which it is secured, or if recovery is sought from Shawmut on the Due to Debtor Obligation referred to in paragraph 5 above, then the injunctive provisions of Plan Sec. XII.E, which is imposed as of the Effective Date of the Plan, prohibits Shawmut (as well as any other setoff-secured creditor) from defending or asserting its right of setoff. Plan Sec. XII.E.1(d) and 2(d). 11. This violates the express provisions of 11 U.S.C. 553(a).

OBJECTION TO CONFIRMATION OF PLAN 12. In order for the Plan as proposed to be confirmed, the plan proponents must

satisfy the requirements contained in Section 1129 of the Bankruptcy Code, including without limitation 1129 (a)(1). 13. Section 1129 (a)(1) provides that the Plan must comply with the applicable

provisions of [the Bankruptcy Code]. The Plan does not do so. Rather, the Plan is at odds with Section 553 of the Bankruptcy Code which, as set forth above, preserves setoff rights (with exceptions not here relevant). 14. Whether intentionally or not, the Plan is drafted so that the setoff rights of secured

creditors like Shawmut that were both suppliers and customers of the Debtors are effectively eliminated on the Effective Date by the injunctive provision in Article XII (E)(1) the Plan, without compensation (let alone the indubitable equivalent that would be required under Section 1129(b)(2)(A)(iii)). 15. These provisions together violate Section 553(a) and therefore the Plan does not

comply with applicable provisions of the Bankruptcy Code. As a result, the Plan cannot be confirmed and this Court should deny confirmation. 16. Alternatively, assuming that the disconnect between (a) Shawmuts 553(a)-

protected setoff rights, and (b) Plan Article XII. E is unintentional, the problem can be solved by including the following clarifying language in any order of confirmation that may be entered: Notwithstanding anything contained in the Plan or elsewhere in this Order, the provisions of Plan Article XII. E shall not preclude the assertion at any time of a right of setoff by the holder of a Disputed Other Secured Claim for which a proof of claim was timely Filed and the claimed security for which is a right of setoff. Any objection to such right of setoff shall be determined in accordance with the procedures set forth in Plan Article VII.

CONCLUSION For all the foregoing reasons, the Court should deny confirmation of the Plan. Respectfully submitted, SHAWMUT CORPORATION By its attorneys, April 26, 2007 /s/ Julie Beth Teicher Julie Beth Teicher (P34300) Erman, Teicher, Miller, Zucker & Freedman, P.C. 400 Galleria Officentre, Suite 444 Southfield, MI 48034 (248) 827-4100

Of counsel: Peter Nils Baylor (BBO #033920) Jesse I. Redlener (BBO #646851) NUTTER MCCLENNEN & FISH LLP World Trade Center West 155 Seaport Boulevard Boston, MA 02210-2604 (617) 429-2000
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In re: COLLINS & AIKMAN CORPORATION, et al., Debtors.

Chapter 11 Case No. 05-55927 (SWR) Jointly Administered

CERTIFICATE OF SERVICE I hereby certify that on April 26, 2007, I electronically filed Objection by Shawmut Corporation to Confirmation of the First Amended Joint Plan of Collins & Aikman Corporation and Its Debtor Subsidiaries and Certificate of Service, using the ECF system, which will send notification of such filing to the following: See attached service list and I hereby certify that on April 26, 2007, I mailed copies of the above-described pleadings, by United States Postal Service, to the following parties in interest: Richard M. Cieri Kirkland & Ellis LP Citigroup Center 153 East 53rd Street New York, NY 10022 Joseph M. Fischer Lawrence A. Lichtman Carson Fischer, P.L.C. 4111 West Andover Road Second Floor Bloomfield Hills, MI 48302 Thomas B. Radom Butzel Long, P.C. 100 Bloomfield Hills Parkway Bloomfield Hills, MI 48304 David L. Eaton Ray C. Schrock Marc J. Carmel Kirkland & Ellis LLP 200 East Randolph Drive Chicago, IL 60601 Michael S. Stamer Akin, Gump, Strauss, Hauer & Feld L.L.P. 590 Madison Avenue New York, NY 10022 Peter V. Pantaleo Alice B. Eaton Simpson Thacher & Bartlett LLP 425 Lexington Avenue New York, NY 10017

Harold S. Novikoff Gregory E. Pessin Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, NY 10019

Stephen E. Spence U.S. Dept. of Justice Office of the U.S. Trustee 211 West Fort St., Ste. 700 Detroit, MI 48226

/s/ Grace Safko Grace Safko Erman, Teicher, Miller, Zucker & Freedman, P.C. 400 Galleria Officentre, Suite 444 Southfield, MI 48034 248 827-4100
F:\CHAP11\Collins & Aikman\Shawmut Objection to CA Confirmation.DOC

Josef S. Athanas Jason W. Bank Paige E. Barr Robert N. Bassel,; Leonora K. Baughman Frederick A. Berg, Brendan G. Best Kellie M. Blair,; Susanna C. Brennan, Lynn M. Brimer, James R. Bruinsma Charles D. Bullock,; William T. Burgess Dan E. Bylenga Kevin C. Calhoun, Judy B. Calton Marc Carmel,;;;agor;;;rschrock@kirkland. com James K. Cleland, Dawn R. Copley, David J. Coyle Michael G. Cruse, Julius O. Curling John J. Dawson James E. DeLine, Shannon L. Deeby Robert J. Diehl, Robert J. Diehl, Angela Dodd Sara Eagle, Laura J. Eisele, David H. Ellenbogen, Earle I. Erman Michael S. Etkin Joseph M. Fischer Deborah L. Fish, Joseph Foster David H. Freedman Alexis Freeman Timothy A. Fusco,

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Panayiotis D. Marselis Hannah Mufson McCollum, Ralph E. McDowell Michael S. McElwee MSMCELWEE@VARNUMLAW.COM Ralph R. McKee, David G. Michael Arthur W. Miller, Judith Greenstone Miller, Thomas R. Morris, James P. Murphy Kelly A. Myers Max J. Newman Drew S. Norton David J. Nowaczewski, Judy A. O'Neill, Michael R. Paslay,;;wallerbankruptcy@wallerla; Robert A. Peurach Debra Beth Pevos Marc S. Pfeuffer, Mark A. Phillips Robert J. Pineau James A. Plemmons Thomas B. Radom Shawn M. Riley Louis P. Rochkind, Ronald L. Rose Peter C.L. Roth, Edward Todd Sable Daniella Saltz David E. Schlackman Craig S. Schoenherr Ray C. Schrock Eric B. Schultenover,;;wallerbankruptcy@wallerl Mark H. Shapiro,; Mary Kay Shaver Howard S. Sher Robert K. Siegel John A. Simon Jill Kristen Smith Kevin M. Smith,;

Stephen Edward Spence Leslie Stein, Kurt A. Steinke John W. Stevens, Kevin N. Summers, Julie Beth Teicher Julie Beth Teicher Sheryl L. Toby, Erin Lindsay Toomey Brian R. Trumbauer Sean M. Walsh, Jonathan T. Walton Daniel J. Weiner Robert B. Weiss Mary K. Whitmer Robert D. Wolford Scott A. Wolfson Michael I. Zousmer,