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

REPLY OF BRINKS HOFER GILSON & LIONE TO OPPOSITION OF THIRD AVENUE VALUE FUND TO THE SECOND INTERIM FEE APPLICATION OF BRINKS HOFER GILSON & LIONE FOR INTERIM ALLOWANCE OF COMPENSATION FOR SERVICES RENDERED DURING THE THIRD QUARTER OF 2006 Brinks Hofer Gilson & Lione (BHGL), by and through its undersigned counsel, hereby replies (the Reply) to the Opposition (the Objection) of Third Avenue Value Fund (Third Avenue) to the Second Interim Fee Application (the Application) for Interim Allowance of Compensation for Services Rendered During the Third Quarter of 2006. I. Background Collins & Aikman et al. (the Debtors) retained BHGL to assist with intellectual property matters in these bankruptcy cases. The fees in question resulted from BHGLs representation of Debtors in (1) defending Debtors in a patent infringement lawsuit brought by Wilhelm Karman GmbH (Wilhelm Karman GmbH v. Dura Convertible Systems, Inc., Adversary Proceeding No. 06-04059); (2) defending Debtors in a patent infringement lawsuit brought by ASC, Inc. (ASC, Inc. v. Dura Convertible Systems, Inc., Adversary Proceeding No. 06-04507); and (3) handling a large number of Debtors intellectual property matters, including transactional and licensing activities, patent prosecution and patent enforcement. BHGL was retained because BHGL enjoys a tradition of excellence and a reputation for expertise in intellectual property law, particularly in patent litigation. Founded in 1917,

0W[;&,(

0555927061208000000000001

!5

BHGL is consistently rated as one of the top intellectual property firms in the country, and ranked among the leaders in the number of patent infringement lawsuits handled each year. The two patent infringement lawsuits represent the bulk of the work performed by BHGL for Debtors during the time period in question, the Third Quarter of 2006. Approximately 89% of BHGLs total fees and expenses are attributable to the Karmann and ASC lawsuits and for good reason. Of Debtors intellectual property matters, the Karmann and ASC lawsuits present the gravest risk to Debtors estate. In both cases, the plaintiffs are seeking considerable damages - including treble damages and attorneys fees totaling millions of dollars. Additionally, both plaintiffs are seeking injunctive relief in an attempt to stop Dura Convertibles from manufacturing and selling the convertible top for the Ford Mustang and Dodge Viper vehicles. If one or both of the Karmann and ASC lawsuits are successful, or if the Debtors fail to defend either lawsuit, a damages award and/or an injunction would likely cripple the Dura business. Indeed, an injunction could halt production of important, profitable products, including the convertible top for the Ford Mustang, and leave Debtors largest customer Ford Motor Company without a source for one of its signature vehicles. Furthermore, the two lawsuits make the Debtors Dura Convertibles business difficult to sell. As this Court knows, Debtors have decided to sell their individual business units to maximize the value of the estate for the creditors and to save as many jobs as possible. The Dura Convertibles business unit will likely be more difficult to sell, at a fair value to Debtors estate, with the cloud of the two patent infringement lawsuits hanging over its head. Accordingly, BHGL has vigorously defended Debtors in these two lawsuits before this Court. While most patent cases require fourteen months or more before trial, BHGL recommended trying the Karmann and ASC cases in five months to remove the cloud of the lawsuit for sale of the Dura Convertibles business. After the Court entered the expedited

-2-

schedule, BHGL carried the Karmann lawsuit through fact discovery, expert discovery, claim construction, summary judgment motions and had the case ready for trial in five months before the Court referred the case to a District Court judge for mediation at the end of July. The Karmann case is likely only a couple of months from resolution, either by settlement or adjudication. Likewise, BHGL employed similar effort in vigorously defending the ASC lawsuit, before the parties reached an agreement to settle the case. That settlement will likely cost Debtors less than the attorneys fees required to win the case after going through trial and an appeal. Presuming that the Court approves the ASC settlement, it will now be easier to sell the Dura Convertibles business. Unquestionably, BHGLs defense of these lawsuits is a direct benefit to the Debtors estates. Furthermore, the other intellectual property matters handled by BHGL are likewise critical to Debtors estate. Matters such as licensing of technology, patent clearance work, patent prosecution and enforcement of Debtors patents are critical to the function of Debtors businesses - which rely on the development of new technology and the ability to manufacture and sell important products to compete in the marketplace. BHGL has also actively managed Debtors intellectual property department, having set up a patent review committee to help Debtors identify, evaluate and protect its intellectual property, and having revived Debtors enforcement procedures for capitalizing on Debtors patents and other intellectual property. Thus, by providing sophisticated, highly specialized legal advice to Debtors on other intellectual property matters as well, BHGL is certainly providing a direct benefit to the Debtors and their estates. II. Argument Approval of BHGLs Application is governed by Section 330 of the Bankruptcy Code, 11 U.S.C. 101-1330 (the Bankruptcy Code), which authorizes a court to award a professional reasonable compensation for actual [and] necessary services.

-3-

11 U.S.C. 330(a)(1). In accordance with the factors enumerated in section 330 of the Bankruptcy Code, the amount of fees requested in the Application is fair and reasonable given: (a) the complexity of these cases; (b) the time expended; (c) the nature and extent of the services rendered; (d) the value of such services; and (e) the costs of comparable services other than in a case under the Bankruptcy Code. See, e.g., In re Moss, 320 B.R. 143, 156-57 (Bankr. E.D. Mich. 2005); In re Ray, 314 B.R. 643, 662-63 (Bankr. M.D. Tenn. 2004); In re Chary, 201 B.R. 783, 787-88 (Bankr. W.D. Tenn. 1996). BHGL provides an important benefit to the Debtors estates, and has done so at a reasonable price. At all times, BHGL has acted at the express direction of the Debtors or their counsel, and has kept major parties in interest and this Court, which is overseeing the two patent infringement lawsuits, apprised of the status of the matters for which it is responsible. Third Avenues allegations that BHGL billed the Debtors estates for unnecessary services and deliberately deceived the court by filing overstated, unnecessary or otherwise fraudulent fee applications are baseless, offensive, untrue, and unsupported by any factual allegations whatsoever. Amazingly, Third Avenue admits in its Objection that it has not even read BHGLs Fee Application. This alone permits the Court to overrule the Objection. In fact, Third Avenue has not pointed to one single fee or expense entry that is unnecessary, unreasonable or did not provide a benefit to the Debtors estates. Thus, it is difficult for BHGL to respond to the Objection. BHGL can state, however, that it has charged reasonable market rates when performing valuable work including defending the Debtors against two complex and potentially very damaging patent infringement lawsuits and handling other complex intellectual property matters. BHGL fully stands behind all of the work that it has performed to date and is prepared to demonstrate that its fees and expenses are reasonable, necessary and have provided benefit to the Debtors. Thus, the Objection should be overruled.

-4-

Further, BHGL respectfully submits that this Court, the Office of the United States Trustee, the Debtors, the Official Committee of Unsecured Creditors and the Agents are more than capable of reviewing the reasonableness and necessity of the professional fees in these cases, and that a professional fee examiner is not necessary. Such an examiner would only add another layer of cost to the Debtors bankruptcy cases, which is, in theory, what the Objection is meant to combat. Ultimately, however, this is a decision for the Court and the Office of the United States Trustee. Finally, BHGL submits that the Debtors estates and all other parties in interest are protected, because all of BHGLs fees are subject to final approval by this Court. In the event that the Court orders examination of the Application, BHGL requests approval for immediate reimbursement of 100% of the expenses and 80% of the fees requested in the Application. BHGL did not file for these payments as monthly fee requests, as it was permitted to do so, due to BHGLs unfamiliarity with bankruptcy procedures. The fees objected to in the Application represent 100% of the expenses and 100% of the fees billed by BHGL during the period in question, totaling $1,028,439.83. III. Conclusion In light of the foregoing, BHGL respectfully requests that the Court approve the Application, overrule the Objection and grant such other and further relief as is just and proper. Dated: December 8, 2006 /s/ James K. Cleland Steven L. Oberholtzer (P33212) James K. Cleland (P68507) Michael N. Spink (P66527) BRINKS HOFER GILSON & LIONE 524 S. Main Street, Suite 200 Ann Arbor, Michigan 48104 Tel: 734-302-6034 Fax: 734-994-6331 Email: jcleland@brinkshofer.com

-5-

James R. Sobieraj BRINKS HOFER GILSON & LIONE NBC Tower 455 Cityfront Plaza Drive, Suite 3600 Chicago, Illinois 606011 Tel.: 312-321-4200 Fax: 312-321-4299

-6-