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) Hon. Steven W. Rhodes

PROFILE MFG., INC.S RESPONSE TO COLLINS & AIKMAN LITIGATION TRUSTS SEVENTY-FIRST OMNIBUS OBJECTION TO CLAIMS (INSUFFICIENT BOOKS AND RECORDS) [DOCKET NO. 9839] AND REQUEST FOR COSTS Profile Mfg., Inc. (Profile) presents the following Response to the Collins & Aikman Litigation Trusts (Trust) request to disallow and expunge Profiles claim. In support of this Response, Profile respectfully represents as follows: 1. Profile has a timely-filed claim in the above-captioned Chapter 11 case in the

amount of $328,412.52, and which was assigned Claim No. 570 by the Clerk of the Court. On or about July 30, 2008, the Trust filed its Omnibus Objection [Docket No. 9839] to numerous claims, including Claim No. 570 filed by Profile. The stated basis for the Objection is 11 USC 502(d). 2. Profile is a defendant in Adversary Proceeding No. 07-05496 wherein it is

alleged that Profile received preferential transfers which are avoidable under 11 U.S.C. 547. 3. transfers. Profile has denied any liability with respect to the alleged avoidable preferential

0W[;((=

0555927080829000000000001

!f

4.

Profile has provided extensive evidence to Debtors counsel demonstrating that

the alleged preferential transfers are not avoidable under 11 U.S.C. 547 because (I) Profile furnished subsequent new value to Debtor and (ii) the transfers were in the ordinary course of business. 5. There has been no judicial determination that Profile received an avoidable

preferential transfer. 6. Addressing the matter under Section 57(g) of the Bankruptcy Act, the

predecessor to 502(d), the Supreme Court has stated that a creditors claim cannot be allowed or disallowed on grounds that the creditor has received and not repaid an avoidable transfer, until the preference matter is adjudicated. Katchen v Landy, 382 U.S. 323, 86 S. Ct. 467, 15 L.Ed. 391 (1966). A creditors claim cannot be disallowed under 11 U.S.C. 502(d) until there has been actual adjudication that the creditor received an avoidable transfer. In Re Sierra-Cal, 210 BR 168, 173 (Bankr. E.D. Cal. 1997). A judicial determination that creditor received a

preference and has failed to pay it is necessary for disallowance under 11 U.S.C. 502(d). In Re Chase & Sanborn Corp., 124 BR 368, 370 (Bankr. S.D. Fla. 1991). See also, In re Southern Air Transport, Inc., 294 BR 293 (Bankr. S.D. Ohio 2003). Conversely, and in support of Profiles request for reimbursement of costs associated with the defense of the Trusts Objection, there appears to be no authority supporting the disallowance (or allowance) of a claim under 502(d) until after the adjudication of the claims asserted by the Claimant. 7. Based upon the apparent lack of any legal authority for the premature Objections

filed by the Trust, Profile respectfully requests that the Court order the Trust to reimburse profile its costs, including reasonable attorney fees, associated with the preparation and prosecution of Profiles Response to the Trusts Claim Objections. It is clear that the Objections should not

have been filed during the pendency of the adversary proceedings and, accordingly, that there should have been no need for Profile to incur fees associated with the present matter. WHEREFORE, Profile respectfully requests that the Court deny the Trusts objection and allow Profiles claim to stand until there is a judicial determination that Profile has received an avoidable preferential transfer. Furthermore, Profile requests the Court direct the Trust to pay costs, including reasonable attorney fees, to Profile, based upon the premature filing of the Objections. Respectfully submitted, DRIGGERS, SCHULTZ & HERBST, P.C. By:/s/ Richard B. Tomlinson (P27604) Edward S. Toth (P44734) Mark E. Mueller (P46926) Attorneys for Profile Mfg., Inc. 2600 W. Big Beaver Rd., Suite 550 Troy, MI 48084 248-649-6000 rtomlinson@driggersschultz.com

Dated: August 29, 2008

STEINBERG SHAPIRO & CLARK

Dated: August 29, 2008

By:___/s/ Mark H. Shapiro ________________ Mark H. Shapiro (P43134) Co-counsel for Profile Mfg., Inc. 24901 Northwestern Hwy. Ste. 611 Southfield, MI 48075 (248) 352-4700 shapiro@steinbergshapiro.com