10000023231

IN THE UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION In re: COLLINS & AIKMAN CORPORATION,
et al.1 Debtors. ) ) ) ) ) ) ) ) Chapter 11 Case No. 05-55927 (SWR) (Jointly Administered) (Tax Identification #13-3489233) Honorable Steven W. Rhodes
NOTICE AND OPPORTUNITY TO RESPOND TO DEBTORS MOTION FOR ENTRY OF AN ORDER APPROVING EMPLOYMENT AGREEMENTS OF FRANK MACHER, AS PRESIDENT AND CHIEF EXECUTIVE OFFICER, AND OTHER MEMBERS OF DEBTORS NEW MANAGEMENT TEAM PLEASE TAKE NOTICE THAT the above-captioned debtors (collectively, the Debtors) have filed the Debtors Motion for Entry of an Order Approving Employment Agreements of Frank Macher, as President and Chief Executive Officer, and Other Members of Debtors New Management Team (the Motion).
The Debtors in the jointly administered cases include: Collins & Aikman Corporation; Amco Convertible Fabrics, Inc., Case No. 05-55949; Becker Group, LLC (d/b/a/ Collins & Aikman Premier Mold), Case No. 05-55977; Brut Plastics, Inc., Case No. 05-55957; Collins & Aikman (Gibraltar) Limited, Case No. 05-55989; Collins & Aikman Accessory Mats, Inc. (f/k/a the Akro Corporation), Case No. 05-55952; Collins & Aikman Asset Services, Inc., Case No. 05-55959; Collins & Aikman Automotive (Argentina), Inc. (f/k/a Textron Automotive (Argentina), Inc.), Case No. 05-55965; Collins & Aikman Automotive (Asia), Inc. (f/k/a Textron Automotive (Asia), Inc.), Case No. 0555991; Collins & Aikman Automotive Exteriors, Inc. (f/k/a Textron Automotive Exteriors, Inc.), Case No. 05-55958; Collins & Aikman Automotive Interiors, Inc. (f/k/a Textron Automotive Interiors, Inc.), Case No. 05-55956; Collins & Aikman Automotive International, Inc., Case No. 05-55980; Collins & Aikman Automotive International Services, Inc. (f/k/a Textron Automotive International Services, Inc.), Case No. 05-55985; Collins & Aikman Automotive Mats, LLC, Case No. 05-55969; Collins & Aikman Automotive Overseas Investment, Inc. (f/k/a Textron Automotive Overseas Investment, Inc.), Case No. 05-55978; Collins & Aikman Automotive Services, LLC, Case No. 05-55981; Collins & Aikman Canada Domestic Holding Company, Case No. 05-55930; Collins & Aikman Carpet & Acoustics (MI), Inc., Case No. 05-55982; Collins & Aikman Carpet & Acoustics (TN), Inc., Case No. 05-55984; Collins & Aikman Development Company, Case No. 05-55943; Collins & Aikman Europe, Inc., Case No. 05-55971; Collins & Aikman Fabrics, Inc. (d/b/a Joan Automotive Industries, Inc.), Case No. 05-55963; Collins & Aikman Intellimold, Inc. (d/b/a M&C Advanced Processes, Inc.), Case No. 05-55976; Collins & Aikman Interiors, Inc., Case No. 05-55970; Collins & Aikman International Corporation, Case No. 05-55951; Collins & Aikman Plastics, Inc., Case No. 05-55960; Collins & Aikman Products Co., Case No. 05-55932; Collins & Aikman Properties, Inc., Case No. 0555964; Comet Acoustics, Inc., Case No. 05-55972; CW Management Corporation, Case No. 05-55979; Dura Convertible Systems, Inc., Case No. 05-55942; Gamble Development Company, Case No. 05-55974; JPS Automotive, Inc. (d/b/a PACJ, Inc.), Case No. 05-55935; New Baltimore Holdings, LLC, Case No. 05-55992; Owosso Thermal Forming, LLC, Case No. 05-55946; Southwest Laminates, Inc. (d/b/a Southwest Fabric Laminators Inc.), Case No. 05-55948; Wickes Asset Management, Inc., Case No. 05-55962; and Wickes Manufacturing Company, Case No. 05-55968.
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PLEASE TAKE FURTHER NOTICE THAT your rights may be affected. You may wish to review the Motion and discuss it with your attorney, if you have one in these cases. (If you do not have any attorney, you may wish to consult one.) PLEASE TAKE FURTHER NOTICE THAT in accordance with the First Amended Notice, Case Management and Administrative Procedures [Docket No. 294] (the Case Management Procedures), entered on the docket on June 15, 2005, if you wish to object to the Court granting the relief sought in the Motion, or if you want the Court to otherwise consider your views on the Motion, no later than September 9, 2005 at 12:00 p.m., prevailing Eastern Time, or such shorter time as the Court may hereafter order and of which you may receive subsequent notice, you or your attorney must file with the Court a written response, explaining your position at:2 United States Bankruptcy Court 211 West Fort Street, Suite 2100 Detroit, Michigan 48226 PLEASE TAKE FURTHER NOTICE THAT if you mail your response to the Court for filing, you must mail it early enough so the Court will receive it on or before the date above. PLEASE TAKE FURTHER NOTICE THAT you must also serve the documents so that they are received on or before September 9, 2005 at 12:00 p.m., prevailing Eastern Time, in accordance with the Case Management Procedures, including to:
Response or answer must comply with Rule 8(b), (c) and (e) of the Federal Rules of Civil Procedure.
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Carson Fischer, P.L.C. Attn: Joseph M. Fischer 300 East Maple Road, Third Floor Birmingham, Michigan 48009 Facsimile: (248) 664-1832 E-mail: jfischer@carsonfischer.com -andKirkland & Ellis LLP Attn: Richard M. Cieri, Esq. Citigroup Center 153 East 53rd Street New York, NY 10022 Facsimile: (212) 446-4900 E-mail: rcieri@kirkland.com -andKirkland & Ellis LLP Attn: David L. Eaton, Esq. Ray C. Schrock, Esq. Marc J. Carmel, Esq. 200 East Randolph Drive Chicago, Illinois 60601 Facsimile: (312) 861-2200 E-mail: deaton@kirkland.com rschrock@kirkland.com mcarmel@kirkland.com PLEASE TAKE FURTHER NOTICE THAT if no responses to the Motion are timely filed and served, the Court may grant the Motion and enter the order without a hearing as set forth in Rule 9014-1 of the Local Rules for the United States Bankruptcy Court for the Eastern District of Michigan.
K&E 10670725.11
Dated: August 29, 2005
KIRKLAND & ELLIS LLP /s/ Marc J. Carmel Richard M. Cieri (NY RC 6062) Citigroup Center 153 East 53rd Street New York, New York 10022 Telephone: (212) 446-4800 Facsimile: (212) 446-4900 -andDavid L. Eaton (IL 3122303) Ray C. Schrock (IL 6257005) Marc J. Carmel (IL 6272032) 200 East Randolph Drive Chicago, Illinois 60601 Telephone: (312) 861-2000 Facsimile: (312) 861-2200 -andCARSON FISCHER, P.L.C. Joseph M. Fischer (P13452) 300 East Maple Road, Third Floor Birmingham, Michigan 48009 Telephone: (248) 644-4840 Facsimile: (248) 644-1832 Co-Counsel for the Debtors
K&E 10670725.11
IN THE UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION In re: COLLINS & AIKMAN CORPORATION, et al.1 Debtors. ) ) ) ) ) ) ) ) Chapter 11 Case No. 05-55927 (SWR) (Jointly Administered) (Tax Identification #13-3489233) Honorable Steven W. Rhodes
NOTICE OF HEARING PLEASE TAKE NOTICE that a hearing on the above-captioned Debtors Motion for Entry of an Order Approving Employment Agreements of Frank Macher, as President and Chief Executive Officer, and Other Members of Debtors New Management Team (the Motion) is scheduled to be heard before the Honorable Steven W. Rhodes on September 12, 2005 at 2:00 p.m., prevailing Eastern Time, or as soon thereafter as counsel may be heard, in his courtroom in the United States Bankruptcy Court, 211 W. Fort Street, Detroit, Michigan 48226.
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PLEASE TAKE FURTHER NOTICE that if no responses to the Motion are timely filed and served, the Court may grant the Motion and enter the order without a hearing as set forth in Rule 9014-1 of the Local Rules for the United States Bankruptcy Court for the Eastern District of Michigan. Dated: August 29, 2005 KIRKLAND & ELLIS LLP /s/ Marc J. Carmel Richard M. Cieri (NY RC 6062) Citigroup Center 153 East 53rd Street New York, New York 10022 Telephone: (212) 446-4800 Facsimile: (212) 446-4900 -andDavid L. Eaton (IL 3122303) Ray C. Schrock (IL 6257005) Marc J. Carmel (IL 6272032) 200 East Randolph Drive Chicago, Illinois 60601 Telephone: (312) 861-2000 Facsimile: (312) 861-2200 -andCARSON FISCHER, P.L.C. Joseph M. Fischer (P13452) 300 East Maple Road, Third Floor Birmingham, Michigan 48009 Telephone: (248) 644-4840 Facsimile: (248) 644-1832 Co-Counsel for the Debtors
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IN THE UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION In re: ) ) COLLINS & AIKMAN CORPORATION, et al.1 ) ) Debtors. ) ) ) ) ) ) ) ) Chapter 11 Case No. 05-55927 (SWR) (Jointly Administered) (Tax Identification #13-3489233) Honorable Steven W. Rhodes
Hearing Date (If Necessary): September 12, 2005 at 2:00 pm Objection Deadline: September 9, 2005 at 12:00 p.m.
DEBTORS MOTION FOR ENTRY OF AN ORDER APPROVING EMPLOYMENT AGREEMENTS OF FRANK MACHER, AS PRESIDENT AND CHIEF EXECUTIVE OFFICER, AND OTHER MEMBERS OF DEBTORS NEW MANAGEMENT TEAM The above-captioned debtors (collectively, the Debtors) hereby move the Court (this Motion) for entry of an order approving the employment agreements of Frank Macher, as president and chief executive officer, and certain other members of the Debtors new management team. In support of this Motion, the Debtors respectfully represent as follows:
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Jurisdiction 1. The Court has jurisdiction over this matter pursuant to 28 U.S.C. 1334.
This matter is a core proceeding within the meaning of 28 U.S.C. 157(b)(2). 2. 3. Venue is proper pursuant to 28 U.S.C. 1408 and 1409. The statutory bases for the relief requested herein are sections 105(a) and
363(b) of chapter 11 of the Bankruptcy Code, 11 U.S.C. 101-1330 (the Bankruptcy Code). Background 4. On May 17, 2005 (the Petition Date), the Debtors filed their voluntary
petitions for relief under chapter 11 of the Bankruptcy Code. The Debtors are operating their businesses and managing their properties as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. No trustee or examiner has been appointed in these cases. On the Petition Date, the Court entered an order jointly administering these cases pursuant to Rule 1015(b) of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules). 5. On May 24, 2005, the United States Trustee appointed an official
committee of unsecured creditors pursuant to section 1102 of the Bankruptcy Code (the Committee). 6. The Debtors and their non-Debtor affiliates are leading global suppliers of
automotive components, systems and modules to all of the worlds largest vehicle manufacturers, including DaimlerChrysler AG, Ford Motor Company, General Motors Corporation, Honda Motor Company, Inc., Nissan Motor Company Unlimited, Porsche Cars GB, Renault Crateur D Automobiles, Toyota SA and Volkswagen AG.
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Relief Requested 7. Simply put, this Motion is critical to the Debtors efforts to successfully
reorganize and otherwise maximize value for these estates. As the Court is aware, the Debtors management team had been decimated prior to the Petition Date, and significant gaps still exist in the Debtors management team. The Debtors understand and appreciate how critical new management is to the success of these cases, and their major constituencies do as well. 8. For instance, certain of the Debtors customers have expressed concern
over the gaps in the Debtors management and have stated that those gaps may be an impediment to ongoing contract renegotiations. Moreover, these customers have also been clear that the Debtors will not be considered for new business until the customers have confidence in the Debtors operations and management. The Debtors other major constituencies also have
expressed to the Debtors that the viability of a stand-alone reorganization depends upon the Debtors hiring new management. 9. To address the Debtors and their major constituencies concerns, the
Debtors, in consultation with the Committee and the Debtors prepetition and postpetition secured lenders (collectively, the Lenders), have been assembling an experienced and able management team that will give the Debtors the experience, expertise and know-how that is critical to maximizing value for these estates. The Debtors are pleased to now present for this Courts approval employment arrangements that will fill essential positions within the organization. 10. Accordingly, the Debtors request that the Court approve the employment
agreements of Frank Macher, as president and chief executive officer, and certain other members
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of the Debtors new management team, pursuant to sections 105(a) and 363(b) of the Bankruptcy Code. Mr. Machers Qualifications 11. The Debtors are fortunate to obtain the services of Mr. Macher.
Mr. Macher has a wealth of automotive industry experience. Mr. Macher most recently was the chairman of the board and chief executive officer of Federal-Mogul Corporation, a $6.3 billion global automobile components manufacturer, from 2001 to 2004. Among other things, during his tenure with Federal-Mogul, which spanned prior to and during Federal-Moguls chapter 11 cases, Mr. Macher engineered approximately $600 million in cost savings and substantial EBITDA improvement. 12. Prior to Federal-Mogul, Mr. Macher served as president and chief
executive officer of ITT Automotive, a $6.2 billion global automotive parts supplier, from 1996 to 1998. During his tenure with ITT Automotive, among other things, Mr. Macher oversaw a spin-off of operations that generated approximately $3.7 billion for the company. 13. Finally, Mr. Macher worked for Ford Motor Company from 1966 to 1995.
Among other positions, during his tenure with Ford, Mr. Macher served as vice president and general manager of Fords Automotive Components Division, which generated approximately $11.5 billion per year in sales and eventually was spun-off as the publicly traded company now known as Visteon.
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Employment Agreements A. Macher Agreement 14. Upon the Courts approval, the Debtors will enter into an employment
agreement (the Macher Agreement) to retain Mr. Macher substantially in the form attached hereto as Exhibit B and summarized below. 15. Agreement:2 (a) Position and Duties. During the Employment Period,3 Mr. Macher will serve as the President and Chief Executive Officer of the Company, and will report to the Companys Board of Directors (Board). In addition, during the Employment Period, Mr. Macher will serve as a member of the Board. Term. The Company will employ Mr. Macher during the period that commenced on the date of the Macher Agreement and continues until the earlier of (i) June 30, 2007, unless extended by mutual agreement and (ii) termination of the Macher Agreement. Compensation. (i) Base Salary. The Company will pay Mr. Macher an annual base salary of not less than $750,000. Such amount will be reviewed annually by the Compensation Committee of the Board and may be increased (but not decreased) by the Compensation Committee or the Board. During the Employment Period, the Fixed Bonus. Company will pay Mr. Macher a quarterly bonus of $250,000 for each of the calendar quarters ending September 30, December 31, March 31 and June 30 of each year. Success Fee. In connection with these cases, Mr. Macher will participate in the Incentive Compensation Pool The following is a summary of the principal terms of the Macher
(b)
(c)
(ii)
(iii)
The description of the principal terms of the Macher Agreement contained herein is intended solely to give the Court and interested parties a brief overview of the most significant terms of the Macher Agreement and is not intended in any way to constitute the controlling terms thereof. Capitalized terms used but not otherwise defined in this paragraph 15 shall have the meaning set forth in the Macher Agreement.
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Program (other than with respect to the annual bonus program discussed herein).4 (iv) Benefits. During the Employment Period, among other things: (A) Mr. Macher will be entitled to participate in the current and any future savings, retirement, fringe benefit, long-term compensation and any other compensation or benefit plans, practices, policies and programs of the Company; (B) Mr. Macher will be entitled to five weeks of annual vacation, effective as of the date of the Macher Agreement, to be taken in accordance with the Companys vacation policy; (C) Mr. Macher will receive an annual perquisite allowance, which allowance will not be less than $30,000 per year, plus the gross-up to cover Federal and state taxes thereon; and (D) Mr. Macher and/or Mr. Machers family, as the case may be, will, effective as of the date of the Macher Agreement, be eligible for participation in, and will receive all benefits under medical, dental, disability, life insurance and other welfare benefit plans, practices, policies and programs provided by the Company. Mr. Macher is declining coverage under the Companys medical, dental and vision plans. Directors and Officers Liability Insurance. The Company will obtain directors and officers liability insurance, under terms comparable to the existing policies, with a limit or aggregate limits of not less than $25,000,000, covering claims arising after the Petition Date.5 If the Company fails to maintain such policy, or adequate replacement coverage, and Mr. Macher is required to purchase tail or run-off coverage, the Company will promptly reimburse him for such expense.
(v)
(d)
Benefits Upon Termination. (i) Termination Other Than No Cause Termination or Constructive Termination. If Mr. Machers employment under the Macher Agreement is terminated for other than either a No Cause Termination or a Constructive Termination, the Company will, unless otherwise agreed in writing between the parties, promptly pay to Mr. Macher or, if applicable, Mr. Machers estate or legal
The Debtors are seeking approval of the Incentive Compensation Pool Program as it applies to Mr. Macher in connection with this Motion. A term sheet describing the Incentive Compensation Pool Program is attached as Exhibit C to this Motion. The Debtors will obtain the directors and officers liability insurance policy upon Court approval of this Motion.
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representative: (A) Mr. Machers unpaid base salary accrued to the Termination Date; (B) any accrued but unused vacation; and (C) all vested and accrued benefits earned by Mr. Macher under any employee benefit plans and programs sponsored by the Company in which Mr. Macher participates, subject to the terms and conditions of such plans and programs. (ii) Termination as a Result of No Cause Termination or Constructive Termination. If Mr. Machers employment under the Macher Agreement is terminated as a result of either a No Cause Termination or a Constructive Termination, the Company will pay and provide to Mr. Macher within ten days after termination the following benefits: Mr. Machers unpaid base salary accrued to the Termination Date and any accrued but unused vacation; All vested and accrued benefits earned by Mr. Macher under any employee benefit plans and programs sponsored by the Company in which Mr. Macher participates; A lump sum payment of $1,750,000, reduced by the amount of any Success Fee paid or payable (provided payment is actually made) to Mr. Macher, which severance will be reduced to $875,000 under certain circumstances; and For a period of one year from the Termination Date, continued participation at Company expense in the insurance programs and other arrangements in which Mr. Macher participated prior to his employment termination.
(iii)
Under certain circumstances, if Success Fee. (A) Mr. Macher has been terminated other than for Cause by the Company or other than by reason of Death Termination, and (B) if the Termination Date is within 90 days after a disclosure statement with respect to a plan of reorganization is approved by the Bankruptcy Court, then the Company will promptly pay to Mr. Macher after approval of the plan the Success Fee.
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(e)
Treatment of Payments. Every payment and distribution obligation of the Company under the Macher Agreement will be treated as an administrative expense pursuant to section 503(b)(1)(A) of the Bankruptcy Code.
B.
Other Management Agreements 16. Upon the Courts approval, the Debtors will enter into employment
agreements (the Other Management Agreements, and collectively, with the Macher Agreement, the Employment Agreements) to retain certain other members of the Debtors new management team (collectively, with Mr. Macher, the New Management Team), substantially in the forms attached hereto as Exhibit D and summarized below.6 In particular, the Debtors are seeking to fill the following critical positions: (a) Senior Vice President of Business Strategy; (b) Senior Vice President of Legal; (c) Executive Vice President of Plastics; (d) President of Global Soft Trim; (e) Vice President of Manufacturing Operations; and (f) Treasurer, each of which are critical to overseeing the success of the Debtors business operations. 17. The principal terms of the Other Management Agreements are similar.
The following is a summary of the principal terms of the Other Management Agreements:7 (a) Terms of Employment. The employment period commences on the date of the agreement and continues until the earlier of (i) December 31, 2006 or March 31, 2007 (depending on the individual agreement), unless extended by mutual agreement, and (ii) employment is terminated as provided in the employment agreement.
Due to confidentiality concerns (such as, in certain instances, a prospective employees current employment with another company), the names of employees have been removed from the copies of the Other Management Agreements attached hereto as Exhibit D. The Debtors, however, have provided true and correct copies of the Other Management Agreements to the Committee and the agent to the Debtors prepetition and postpetition secured lenders and have fully vetted these candidates with those constituencies. The description of the principal terms of the Other Management Agreements contained herein is intended solely to give the Court and interested parties a brief overview of the most significant terms of the Other Management Agreements and is not intended in any way to constitute the controlling terms thereof. Capitalized terms used but not otherwise defined in this paragraph 17 shall have the meaning set forth in the Other Management Agreements.
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(b)
Base Salary. Annual base salaries by position of employment: (i) (ii) (iii) (iv) (v) (vi) Senior Vice President of Business Strategy - $350,000; Senior Vice President of Legal - $450,000; Executive Vice President of Plastics - $400,000; President of Global Soft Trim - $450,000; Vice President of Manufacturing Operations - $275,000; and Treasurer - $250,000.
(c)
Bonus Plan. During the term of employment, the employee will be paid a guaranteed bonus payable in quarterly installments throughout the life of the employment agreement. The annual bonus percentage for the employee will be fifty (50%) of the employees base salary. The employee will also be eligible for a success bonus to be determined by the Chief Executive Officer in accordance with the Incentive Compensation Pool Program.8 Benefits and Perquisites. Employee will be entitled to such fringe benefits and perquisites and to participate in such pension, savings plan and benefit plans, as are generally made available to similarly situated executives of the Company during the term of the employment agreement. Reimbursement of Expenses. The Company will reimburse the employee for all reasonable travel, entertainment and other reasonable business expenses reasonably incurred by the employee in connection with the performance of his duties under the employment agreement, provided that the employee furnishes to the Company adequate records or other evidence respecting such expenditures. Severance. If the employees employment under the employment agreement is terminated prior to the expiration of the term of the employment agreement as a result of a No Cause Termination or a Constructive Termination, the Company will pay and provide to the employee base salary for twelve months, based on the rate of base salary in effect immediately preceding the Termination Date.
(d)
(e)
(f)
The Incentive Compensation Pool Program is being sought for approval as to the New Management Team as part of this Motion.
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(g)
Treatment of Payments. Every payment and distribution obligation of the Company under the Other Management Agreements will be treated as an administrative expense pursuant to section 503(b)(1)(A) of the Bankruptcy Code. Basis for Relief
18.
The Employment Agreements provide a significant benefit to the Debtors
estates by obtaining the services of Mr. Macher, as president and chief executive officer, and other members of the Debtors new management team. The Debtors, in their business judgment, believe the Employment Agreements are reasonable in light of the circumstances surrounding these cases and are in the best interests of the Debtors estates. Therefore, for the reasons discussed herein, the Debtors respectfully submit that the Employment Agreements should be approved. 19. Section 105(a) of the Bankruptcy Code permits the court to issue any
order that is necessary or appropriate to carry out the provisions of this title. 11 U.S.C. 105(a). Section 363(b) of the Bankruptcy Code provides, in relevant part, that the trustee, after notice and a hearing, may use, . . . other than in the ordinary course of business, property of the estate. A court has the statutory authority to authorize a debtor to use property of the estate pursuant to section 363(b)(1) of the Bankruptcy Code when such use is an exercise of the debtors sound business judgment and when the use of the property is proposed in good faith. In re Delaware & Hudson Ry. Co., 124 B.R. 169, 176 (D. Del. 1991); In re Lionel Corp., 722 F.2d 1063, 1071 (2d Cir. 1983); see also Fulton State Bank v. Schipper, 933 F.2d 513, 515 (7th Cir. 1991) (a debtors decision must be supported by some articulated business justification); Stephen Indus., Inc. v. McClung, 789 F.2d 386, 390 (6th Cir. 1986) (adopting the sound business purpose standard for sales proposed pursuant to section 363(b)); In re Montgomery
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Ward Holding Corp., 242 B.R. 147, 153 (Bankr. D. Del. 1999); In re Ernst Home Center, Inc., 209 B.R. 974, 979 (Bankr. W.D. Wash. 1997). 20. Under section 363(b) of the Bankruptcy Code, a debtor has the burden to
establish that it has a valid business purpose for using estate property outside the ordinary course of business. See Lionel Corp., 722 F.2d at 1070-71. Once the debtor has articulated such a valid business purpose, however, a presumption arises that the debtors decision was made on an informed basis, in good faith and in the honest belief that the action was in the debtors best interest. See In re Integrated Resources, Inc., 147 B.R. 650, 656 (S.D.N.Y. 1992). A party in interest seeking to challenge the debtors valid business purpose must produce some evidence supporting its objections. Montgomery Ward, 242 B.R. at 155. 21. The retention of corporate officers and executive management by
chapter 11 debtors under section 363 of the Bankruptcy Code has been approved numerous times by bankruptcy courts. See In re Penn Traffic Co., Case No. 03-22945 (ASH) (Bankr. S.D.N.Y. Sept. 17, 2003); In re Adelphia Comm. Corp., Case No. 02-41729 (REG) (Bankr. S.D.N.Y. Mar. 4, 2003); In re Worldcom, Inc., Case No. 02-13533 (AJG) (Bankr. S.D.N.Y. Dec. 16, 2002); In re Lernout & Hauspie Speech Products N.V., Case No. 00-4397 through 00-4399 (JHW) (Bankr. D. Del. Apr. 10, 2001); In re ICG Comm., Inc., Case No. 00-4238 (PJW) (Bankr. D. Del. Feb. 26, 2001); In re Imperial Home Decor Group, Inc., Case No. 00-19 (MFW) (Bankr. D. Del. June 14, 2000); In re Clothestime, Inc., Case No. SA95-22533-JW (Bankr. C.D. Cal. Feb. 13, 1997). 22. The Debtors submit that their decision to retain the New Management
Team on terms consistent with the Employment Agreements is based upon their sound business judgment and is in the best interests of the Debtors estates. In addition, the Debtors submit that
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all elements of the business judgment rule have been satisfied by their employment decisions that are the subject of this Motion. 23. In particular, new management is critical to the success of these cases.
Indeed, certain of the Debtors major customers have expressed to the Debtors that new management is essential to, among other things, (a) contract renegotiations and (b) consideration for new business. Similarly, the Debtors other major constituencies also have expressed to the Debtors that the viability of a stand-alone reorganization depends upon the Debtors hiring new management. 24. To address these concerns, the Debtors assembled the New Management
Team. The process undertaken to identify the New Management Team was thorough and involved due consideration by the Debtors and their advisors of several qualified candidates for executive positions. The Debtors submit that the New Management Team has the experience, expertise and know-how that are critical to maximizing value for these estates. 25. In addition, the terms of the Employment Agreements, including the
salary, benefits and other perquisites to be paid to the New Management Team as outlined in the Employment Agreements, are the result of substantial arms-length negotiations between the Debtors (in consultation with the Committee and the Lenders) and each member of the New Management Team. The Debtors and their advisors consider the employment terms to be fair, reasonable and appropriate for executive management of a company of the Debtors size and in the Debtors industry. 26. As part of the Debtors continuing restructuring efforts, the Debtors have
worked with the Committee and the Lenders, all of whom have stressed the importance of solid executive management and leadership of the very type that the New Management Team will 14
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bring to the Debtors. The appointment of the New Management Team will help the Debtors move forward with their business plan and emerge from these cases poised to resume business as a strong and viable automotive industry competitor. Accordingly, to ensure the Debtors the greatest possible chances of successfully emerging from chapter 11, the Debtors believe that it is critical that the Debtors receive the Courts approval to enter into the Macher Agreement and the Other Management Agreements. Notice 27. Notice of this Motion has been given to the Core Group, the 2002 List and
Affected Parties as required by the Case Management Procedures.9 In light of the nature of the relief requested, the Debtors submit that no further notice is required. No Prior Request 28. any other court. No prior motion for the relief requested herein has been made to this or
Capitalized terms used in this paragraph 27 not otherwise defined herein shall have the meanings set forth in the First Amended Notice, Case Management and Administrative Procedures [Docket No. 294].
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WHEREFORE, the Debtors respectfully request the entry of an order, substantially in the form attached hereto as Exhibit A, (a) authorizing the Debtors to enter into and perform under the Macher Agreement and the Other Management Agreements substantially in the forms attached hereto and (b) granting such other and further relief as is just and proper. Dated: August 29, 2005 KIRKLAND & ELLIS LLP /s/ Marc J. Carmel Richard M. Cieri (NY RC 6062) Citigroup Center 153 East 53rd Street New York, New York 10022 Telephone: (212) 446-4800 Facsimile: (212) 446-4900 -andDavid L. Eaton (IL 3122303) Ray C. Schrock (IL 6257005) Marc J. Carmel (IL 6272032) 200 East Randolph Drive Chicago, Illinois 60601 Telephone: (312) 861-2000 Facsimile: (312) 861-2200 -andCARSON FISCHER, P.L.C. Joseph M. Fischer (P13452) 300 East Maple Road, Third Floor Birmingham, Michigan 48009 Telephone: (248) 644-4840 Facsimile: (248) 644-1832 Co-Counsel for the Debtors
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IN THE UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION In re: COLLINS & AIKMAN CORPORATION,

Dated: August 29, 2005

The Employment Agreements provide a significant benefit to the Debtors

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