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) Honorable Steven W. Rhodes

MOTION OF FIRE MANS FUND INSURANCE COMPANY PURSUANT TO FEDERAL RULE OF BANKRUPTCY PROCEDURE 3018(a) TO ALLOW CLAIMS FOR PLAN VOTING PURPOSES

Firemans Fund Insurance Company, National Surety Company and possibly other related insurance companies (collectively, FFIC), by their attorneys, move this Court pursuant to Rule 3018(a) of the Federal Rules of Bankruptcy Procedure to temporarily allow their claims for the limited purpose of voting on the First Amended Joint Plan of Collins & Aikman Company And Its Debtors Subsidiaries (the Plan), as follows: Jurisdiction and Venue 1. This Court has jurisdiction over this Motion pursuant to 28 U.S.C.

1334. This matter is a core proceeding within the meaning of 28 U.S.C. 157(b)(2). The predicate for the relief requested herein is Federal Rule of Bankruptcy Procedure 3018(a) (Rule 3018(a)).

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2. and 1409.

Venue of this contested matter is proper pursuant to 28 U.S.C. 1408

Background 3. On May 17, 2005 (the Filing Date), each of the Debtors filed a

voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code (the Bankruptcy Code). 4. Prior to the Filing Date, FFIC issued certain insurance policies for

various policy periods (collectively, the Policies) that may provide certain insurance coverage for Debtors. FFIC may also be a party to certain other agreements relating to the Policies (together with the Policies, collectively, the FFIC Agreements). 5. On or about January 9, 2006, FFIC timely filed a Proof of Claim in

each of the Debtors cases (collectively, the Claims). The Claims asserted contingent and unliquidated claims which are subject to further and future adjustment and include, without limitation, claims for additional premium payments, deductibles, self-insured retentions and other expenses that may become due under the FFIC Agreements. Additionally, FFIC may also hold contingent and unliquidated claims, as set forth in the Claims, for any and all rights to payments, rights to receive performance, actions, defenses, indemnification, contribution, subrogation, setoffs and/or recoupments arising from, related to, or in connection with any and all of Debtors (and any other possible named insureds) duties and obligations under the terms of the FFIC Agreements. 6. On February 9, 2007, the Court entered an Order Approving

Disclosure Statement And Fixing Time For Filing Acceptance Or Rejections Of Plan, Combined With Notice Thereof. The Order provided that the Disclosure Statement that was filed as of 2
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January 24, 2007 was approved and established April 9, 2007 as the last day to file written acceptances or rejections of the Plan. 7. Thereafter, on March 28, 2007, the Debtors filed an Ex Parte Motion

For Entry Of An Order (A) Extending The Deadline To Vote On Or Object To The Debtors Chapter 11 Plan And (B) Adjourning The Hearing On Confirmation Of Such Plan. On March 30, 2007, the Court entered an Order (A) Extending The Deadline To Vote On And Object To The Debtors Chapter 11 Plan And (B) Adjourning The Hearing On Confirmation Of Such Plan. The Order extended the deadline to vote on or object to the Plan until May 7, 2007. 8. The Claims will likely remain contingent and unliquidated as of the

May 7, 2007 deadline for voting on the Plan. In addition, because the Claims allow for the possibility that they may ultimately be treated as unsecured claims, they will be impaired under the Plan. Despite FFICs attempt to negotiate an informal resolution of this matter, Debtors did not respond to FFICs requests. Accordingly, FFIC has filed this Motion requesting that the Claims be temporarily allowed as Class 5 general unsecured claims for purposes of voting on the Plan. Relief Requested 9. Pursuant to Rule 3018(a), FFIC requests the entry of an Order

temporarily allowing the Claims as Class 5 Claims for the purpose of voting on the Plan. At the present time, the Claims remain unliquidated, and it is unlikely that the Claims will be liquidated prior to the commencement of the confirmation hearing. FFIC requests that it be permitted to vote the Claims, and be deemed to have an allowed Class 5 general unsecured claims for voting purposes in the amount of $1.00. Such liquidation of the Claims should be made for the limited purpose of allowing FFIC to vote on the Plan, and shall not constitute or be construed as an

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admission by FFIC of any limitation on the ultimate allowed amount of the Claims or the classification of such Claims. FFIC does not waive, and expressly reserves, all rights and defenses, including, without limitation, the right to contest in any court of competent jurisdiction any objection to the basis and/or validity of the ultimate amounts of the Claims.

10.

Rule 3018(a) provides, in relevant part, that:

Notwithstanding objection to a claim or interest, the court after notice of the hearing may temporarily allow the claim or interest in an amount which the Court deems proper for the purpose of accepting or rejecting a plan. Rule 3018(a). 11. Accordingly, Rule 3018(a) enables the Court to use its discretion to

temporarily allow the Claims for purposes of voting on the Plan in an appropriate amount. See In re Zolner, 173 B.R. 629, 633 (Bankr. N.D. Ill. 1994) (The temporary allowance of the claim for voting purposes is committed to [the bankruptcy courts] reasonable discretion.); In re FRG, Inc., 121 B.R. 451, 456 (Bankr. E.D. Pa. 1990) (indicating that the court is accorded broad discretion in the process of valuation for temporary allowance purposes). Neither the Bankruptcy Code nor the Bankruptcy Rules prescribe any method for estimating a claim. The means by which this determination is made are left to the reasonable discretion of the Court, which should apply the method that is best suited to the circumstances of the case. In re Ralph Lauren Womenswear, Inc., 197 B.R. 771, 775 (Bankr. S.D.N.Y. 1996). Unfortunately, [t]here is . . . very little authority addressing what procedures are to be used by courts which employ the [Rule 3018(a)] estimation process. FRG, 121 B.R. at 456.

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12.

The Claims arise from various continuing contractual obligations that

may be owed by Debtors under the FFIC Agreements. Although the Claims remain unliquidated, good cause exists for their allowance for purposes of voting on the Plan. Debtors do not dispute the existence of the FFIC Agreements upon which the Claims are premised. Thus, the only issue is the ultimate amount and temporary classification of the Claims for voting purposes. One of the most fundamental rights upon which the Chapter 11 process is founded is the right to vote for or against the proposed Plan. See In re Matter of Huckabee Auto Co., 33 B.R. 141, 147 (Bankr. M.D. Ga. 1991). Because the Plan purports to affect Debtors various contractual obligations under the FFIC Agreement, and will potentially impair the Claims if they are ultimately classified as unsecured claims, fundamental fairness warrants allowance of the Claims for purposes of voting on the Plan. 13. Additionally, because FFIC is seeking temporary allowance of the

Claims as Class 5 claims in the nominal amount of one ($1.00) dollar, the allowance of such Claims will not be prejudicial to the Debtors or any other party. 14. FFIC reserves the right to amend, update or modify this Motion to the

extent that the amount of the Claims may become liquidated. WHEREFORE, FFIC respectfully requests that this Court, after notice in hearing, allow the Claims for purposes of voting on the Plan; and for such other and further relief as is just. Dated: April 20, 2007 /s/ Kelly A. Myers Kelly A. Myers Myers & Allmand, PLLC 8163 Grand River Avenue Brighton, Michigan 48114 Telephone: (810) 229-6620 Telecopier: (810) 229-6650

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and Leonard P. Goldberger John C. Kilgannon (Members of PA Bar) Stevens & Lee, P.C. 1818 Market Street, 29th Floor Philadelphia, PA 19103 Telephone: (215) 751-2864 Telecopier: (610) 371-7376 Attorneys for Firemans Fund Insurance Company and National Surety Company

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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) Honorable Steven W. Rhodes

ORDER AND NOW, this ____ day of _______________, 2007, upon consideration of the Motion of Firemans Fund Insurance Company Pursuant to Federal Rule of Bankruptcy Procedure 3018(a) To Allow Claims For Plan Voting Purposes (the Motion); the Court having reviewed the Motion and any response thereto, and the Court finding that: (i) the Court has jurisdiction over this matter pursuant to 28 U.S.C. 157 and 1334; (ii) this is a core proceeding pursuant to 28 U.S.C. 157(b)(2); and (c) notice of the Motion was sufficient under the circumstances; and the Court having determined that the legal and factual bases set forth in the Motion establish cause for the relief granted herein, it is ORDERED that the Motion is GRANTED in its entirety, and it is further ORDERED that pursuant to Federal Rule of Bankruptcy Procedure 3018 (a), the Claims1 are deemed temporarily allowed as Class 5 Claims in the amount of $1.00 for the purpose of allowing FFIC to vote on the Plan, and it is further

Capitalized terms not otherwise defined herein shall have the same meaning as set forth in the Motion.

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ORDERED that the temporary allowance of the Claims shall not constitute or be construed as a finding by the Court, or an admission by any party, regarding the validity or ultimate amount of the Claims. _________________________________ Steven W. Rhodes Chief United States Bankruptcy Judge

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