IN THE UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION In re: COLLINS & AIKMAN CORPORATION,

et al. Debtors. ) ) ) ) ) ) ) ) Chapter 11 Case No. 05-55927 (SWR) (Jointly Administered) (Tax Identification # 13-3489233) Honorable Steven W. Rhodes

MOTION OF THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS FOR AN ORDER DIRECTING EXAMINATION AND PRODUCTION OF DOCUMENTS PURSUANT TO RULE 2004 OF THE FEDERAL RULES OF BANKRUPTCY PROCEDURE

TO THE HONORABLE STEVEN W. RHODES, UNITED STATES BANKRUPTCY JUDGE: The Official Committee of Unsecured Creditors (the Committee) of Collins & Aikman Corporation, et al. (collectively, the U.S. Debtors or Collins & Aikman) hereby moves (the Motion) for entry of an order directing the examination and production of documents pursuant to Rule 2004 of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules) from WL Ross & Co. LLC and its affiliates (collectively, Ross). In support of this Motion, the Committee respectfully represents as follows: PRELIMINARY STATEMENT 1. Since the early stages of these chapter 11 cases, Ross has been outspoken in

expressing its interest in Collins & Aikman. Indeed, Ross, which reportedly has purchased a substantial portion of the U.S. Debtors prepetition secured debt obligations and been acquiring and attempting to acquire controlling positions in a number of companies in the automotive sector, has made no secret of its intent to purchase Collins & Aikman out of chapter 11.

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Similarly, shortly after the commencement of these cases, Lear Corporation (Lear), a competitor of the U.S. Debtors, expressed its interest in a transaction with the U.S. Debtors. 2. On October 17, 2005, Ross and Lear announced the creation of a joint venture

(the JV) between Ross and Lear for the primary purpose of exploring an acquisition of Collins & Aikman. 3. Ross has also expressed interest in purchasing the businesses of certain of Collins

& Aikmans foreign subsidiaries (the European Debtors), which are the subject of insolvency proceedings in the United Kingdom and elsewhere in Europe (the European Insolvency Proceedings). Upon information and belief, Ross, which is providing financing to the European Debtors in connection with the European Insolvency Proceedings, has had direct communications with Collins & Aikmans customers in connection with, among other things, a potential acquisition of Collins & Aikmans foreign operations. The U.S. Debtors are, collectively, the largest creditor of the European Debtors and, accordingly, the success of the European Insolvency Proceedings will significantly impact the recoveries of the U.S. Debtors unsecured creditors in these cases. 4. Therefore, the Committee, as the statutory fiduciary representative of the U.S.

Debtors unsecured creditors, believes that it is necessary and appropriate to undertake a 2004 examination and obtain the production of documents from Ross regarding the claims and interests held by Ross against the U.S. Debtors and the European Debtors, the establishment of the JV and certain communications that the Committee understands Ross has had with the U.S. Debtors and European Debtors competitors and customers, in each circumstance as such pertains to the U.S. Debtors and the European Debtors.

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BACKGROUND 5. On May 17, 2005 (the Petition Date), each of the U.S. Debtors filed with this

Court a voluntary petition for relief pursuant to chapter 11 of title 11 of the United States Code (the Bankruptcy Code). No trustee or examiner has been appointed in these cases. 6. Since the Petition Date, the U.S. Debtors have continued in possession of their

properties, and have continued to operate and manage their businesses as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. 7. On May 24, 2005, pursuant to section 1102 of the Bankruptcy Code, the United

States Trustee appointed the Committee. 8. Collectively, the U.S. Debtors are one of the worlds leading suppliers of

automotive components, systems and modules to all of the worlds largest vehicle manufacturers. The U.S. Debtors conduct all of their operating activities through the wholly-owned Collins & Aikman Products Co. subsidiary and direct and indirect subsidiaries of that corporation. 9. Beginning on or about July 15, 2005, the European Debtors commenced

applicable insolvency proceedings in various jurisdictions throughout Europe. The U.S. Debtors are, collectively, the largest creditor of the European Debtors. Ross is providing financing to the European Debtors in connection with the European Insolvency Proceedings and, in connection therewith, has obtained proprietary and confidential information regarding the European Debtors. Upon information and belief, Ross has also obtained proprietary and confidential information regarding the European Debtors in connection with a potential bid to purchase certain of the European Debtors operations.

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10.

Around the same time Ross committed to provide financing to the European

Debtors, Ross began expressing interest in acquiring all or portion of the U.S. Debtors assets. 11. Upon information and belief, Ross is a substantial holder of the U.S. Debtors

bank debt and, through its bank debt holdings, has acquired proprietary and confidential information regarding the U.S. Debtors. See Daily Deal, October 17, 2005, 10/17/05 DAILYDEAL (No Page) (And earlier this year, [Ross] acquired a majority stake in the debt of Collins & Aikman, after it went bankrupt. He even kicked in some debtor-in-possession financing for Collins & Aikmans European units.); BusinessWeek, October 10, 2005, 10/10/05 BUSWK 40 (noting that Ross bought $750 million of Collins & Aikmans bank debt); Washington Post, September 24, 2005, 9/24/05 WP-BUS (No Page), (Wilbur L. Ross Jr. already bought the debt of bankrupt Collins & Aikman.); Chicago Tribune article, September 24, 2005, 9/24/05 KRT-CHITRIB (No Page) (Ross, 67, already owns $750 million of debt in Collins & Aikman .). 12. Upon information and belief, Ross has had communications with certain of the

U.S. Debtors customers regarding the U.S. Debtors and has been given permission by the administrators overseeing the European Insolvency Proceedings to communicate directly with certain of the European Debtors customers regarding the European Debtors. Additionally, upon information and belief, Ross has had discussions with the U.S. Debtors and European Debtors competitors concerning the U.S. Debtors and the European Debtors. 13. On August 16, 2005, Lear publicly announced its interest in pursuing a potential

transaction with Collins & Aikman. See Lear Corporation Form 8-K, dated August 16, 2005. 14. On October 17, 2005, Ross and Lear formed the JV. See Lear Corporation, Form

8-K, dated October 17, 2005; Wall Street Journal (US Edition), October 18, 2005, 10/18/05 4

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WSJD (No Page) (A new joint venture between US businessman Wilbur L Ross and Lear Corp plans to acquire auto-industry assets despite financial problems faced by the sector.). 15. Upon information and belief, the JV was formed to bid on the assets of the U.S.

Debtors. See Id. (The Ross-Lear partnership is considering buying the assets of car-interiors maker Collins & Aikman Corp, which declared bankruptcy early this year.); Fox, October 18, 2005, 10/18/05 FOX (No Page)(quoting Ross we made a big announcement today of a joint venture with Lear Corporation to try to acquire Collins Aikman and other sick auto plastics parts people.); Toronto Star, October 18, 2005, 10/18/05 TRNTST D06 (Wilbur Ross is seeking to combine Lear Corp.s automotive interiors business with bankrupt auto-parts maker Collins & Aikman Corp. and sell the resulting company to the public.). JURISDICTION AND VENUE 16. This Court has jurisdiction over this Motion pursuant to 28 U.S.C. 157 and

1334. Venue is proper pursuant to 28 U.S.C. 1408 and 1409. The relief requested by the Motion is predicated upon sections 105(a) and 1103(c) of the Bankruptcy Code and Bankruptcy Rule 2004. RELIEF REQUESTED 17. By this Motion, the Committee seeks authorization to conduct examinations and

obtain documents from Ross relating to the communications, acts, and conduct of Ross in connection with the administration of these chapter 11 cases and the U.S. Debtors assets. The Committee seeks this information to (a) ensure that there have not been any inappropriate communications which could negatively impact the administration of these cases, compromise the value of the U.S. Debtors estates or impede the U.S. Debtors reorganization efforts and (b)

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determine whether there exist any causes of action against Ross based on such communications. Specifically, the Committee seeks information concerning (a) any and all claims against and interests in the U.S. Debtors and European Debtors held by Ross; (b) Ross communications with any of (i) the U.S. Debtors or European Debtors customers and (ii) the U.S. Debtors or European Debtors competitors regarding the U.S. Debtors and European Debtors, their assets and their liabilities and (c) the formation of the JV. REQUESTED DISCOVERY AND BASIS FOR RELIEF A. Rule 2004 Examination 18. Bankruptcy Code section 1103(c)(2) provides that a committee appointed under

Bankruptcy Code section 1102 may investigate the acts, conduct, assets, liabilities, and financial condition of the debtor, the operation of the debtors business and the desirability of the continuance of such business, and for any other matter relevant to the case or the formulation of a plan. 11 U.S.C. 1102(c)(2). Bankruptcy Rule 2004(a) provides, in relevant part, that [o]n motion of any party in interest, the court may order the examination of any entity. Fed. R. Bankr. P. 2004(a). Rule 2004(b) states that the examination may relate to, among other things, the acts, conduct, or property or to the liabilities and financial condition of the debtor, or to any matter which may affect the administration of the debtors estate. Fed. R. Bankr. P. 2004(b). Rule 2004(c) provides that the production of documentary evidence may be compelled in the manner provided in Rule 9016, which permits the issuance of a subpoena. See Fed R. Bankr. P. 2004(c). 19. The scope of a Rule 2004 examination is unfettered and broad[.] See 9

COLLIER ON BANKRUPTCY 2004.02[1] at 2004-6 (15th ed. revd 2004). Indeed, the scope of a Rule 2004 examination is far broader than the scope of discovery under Rule 26 of the

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Federal Rules of Civil Procedure. See Moore v. Lang (In re Lang), 107 B.R. 130, 132 (Bankr. N.D. Ohio 1989); Snyder v. Society Bank, 181 B.R. 40, 41, (S.D. Tex. 1994), affd, In re Snyder, 52 F.3d 1067 (5th Cir. 1995) (Rule 2004 affords both debtors and creditors the broad rights of examination of a third-partys records.); In re Hammond, 140 B.R. 197, 201 (S.D. Ohio 1992)(the scope of a Rule 2004 examination is broad.); In re GHR Energy Corp., 35 B.R. 534, 537 (Bankr. D. Mass. 1983); In re Mittco, Inc., 44 B.R. 35, 36 (Bankr. E.D. Wis. 1984); In re Texaco, Inc., 79 B.R. 551, 553 (Bankr. S.D.N.Y. 1987). The inquiry may even be a fishing expedition. Chereton v. United States, 286 F.2d 409, 413 (6th Cir. 1961), cert. denied, 336 U.S. 924, 81 S.Ct. 1351 (1961); In re Enron Corp., 281 B.R. 836, 840 (Bankr. S.D.N.Y. 2002) (noting that courts have recognized that Rule 2004 examinations are broad and unfettered and in the nature of fishing expeditions.) (internal citations omitted); In re Lufkin, 255 B.R. 204, 208 (Bankr. E.D. Tenn. 2000). 20. Examinations under Rule 2004 may include within their scope any matter that

may affect the administration of the debtors estate, and, in a chapter 11 case, any matter relevant to the case or to the formulation of a plan. Moore v. Eason (In re Bazemore), 216 B.R. 1020, 1023 (Bankr. S.D. Ga. 1998); In re Express One Intl, Inc., 217 B.R. 215, 216 (Bankr. E.D. Tex. 1998) (The purpose of a Rule 2004 examination is to show the condition of the estate and to enable the [c]ourt to discover its extent and whereabouts, and to come into possession of it, that the rights of the creditor may be preserved.)(citing In re Coffee Cupboard, Inc., 128 B.R. 509, 514 (Bankr. E.D.N.Y. 1991)). 21. By this Motion, the Committee is making a very specific request from Ross for

information relating to and documents concerning (i) any and all claims against and interests in the U.S. Debtors and European Debtors held by Ross; (ii) any and all communications between

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Ross and any of the U.S. Debtors or European Debtors customers regarding the U.S. Debtors or European Debtors; (iii) the establishment of the JV as its pertains to a potential bid for the U.S. Debtors or their assets; and (iv) any and all communications between Ross and any of the U.S. Debtors or European Debtors competitors pertaining to the U.S. Debtors or European Debtors. Such information will provide the Committee with a sufficient understanding of (a) the relationship between (i) Ross and the U.S. Debtors and the European Debtors and (ii) Ross and the U.S. Debtors and European Debtors customers and competitors, (b) the impact that such communications may have on the value of the U.S. Debtors assets, and (c) the ultimate administration of the bankruptcy estates, while imposing only a slight burden upon Ross. 22. Specifically, the Committee seeks this information because, as noted above, early

in these cases, Ross publicly announced its intention to buy the U.S. Debtors and European Debtors assets. Shortly after Ross began expressing interest in Collins & Aikman, Lear also publicly disclosed its interest in pursing a transaction with the U.S. Debtors. Recently, however, it was announced that Ross and Lear have formed a joint venture to, among other things, pursue the acquisition of the U.S. Debtors assets. See Fox, October 18, 2005, 10/18/05 FOX (No Page)(quoting Ross we made a big announcement today of a joint venture with Lear Corporation to try to acquire Collins Aikman and other sick auto plastics parts people.); Toronto Star, October 18, 2005, 10/18/05 TRNTST D06 (Wilbur Ross is seeking to combine Lear Corp.s automotive interiors business with bankrupt auto-parts maker Collins & Aikman Corp. and sell the resulting company to the public.). The Committee seeks a 2004 examination of Ross to determine whether Ross has acted in any manner that may adversely affect the

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administration of the U.S. Debtors estates, chill bidding for the U.S. Debtors assets or negatively impact the value of the U.S. Debtors assets and whether any causes of action exist against Ross on account of such activities. 23. Additionally, as (a) a holder of a substantial amount of the U.S. Debtors bank

debt, (b) a lender to the European Debtors in connection with the European Insolvency Proceedings and (c) a bidder for the European Debtors assets, Ross is in possession of proprietary and confidential information regarding the U.S. Debtors and the European Debtors. The Committee seeks a 2004 examination in order to determine whether such information has been and continues to be properly guarded. 24. Moreover, upon information and belief, Ross has had discussions with customers

of the European Debtors and with customers of the U.S. Debtors regarding the U.S. Debtors and their estates, without the U.S. Debtors consent or involvement. The Committee seeks the requested information in order to determine whether such discussions have occurred and, if so, whether such communications have had or may have an impact on the value of the U.S. Debtors assets and/or the U.S. Debtors reorganization efforts. 25. The Committee reserves its rights to supplement its request for additional

information and documents as such become necessary. WHEREFORE, the Committee requests that the Court enter an order in form attached as Exhibit A (a) requiring Ross to produce documents responsive to the requests, including, but not limited to, those set forth in Exhibit B; (b) directing Ross to submit to examination by counsel

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for the Committee pursuant to Bankruptcy Rule 2004; and (c) granting the Committee such other and further relief as this Court finds just, proper and equitable. Dated: October 25, 2005 Respectfully submitted,

By:

/s/ Thomas B. Radom BUTZEL LONG Thomas B. Radom, Esquire (P24631) Suite 200 100 Bloomfield Hills Parkway Bloomfield Hills, MI 48304 Telephone: (248) 258-1413 Facsimile: (248) 258-1439 Email: radom@butzel.com AKIN GUMP STRAUSS HAUER & FELD LLP Michael S. Stamer, Esquire Philip C. Dublin, Esquire Alexis Freeman, Esquire 590 Madison Avenue New York, NY 10022-2524 Telephone: (212) 872-1000 Facsimile: (212) 872-1002 Counsel for the Official Committee of Unsecured Creditors

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