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UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION IN RE: COLLINS & AIKMAN CORPORATION, et al.

, Debtors. ) ) ) ) ) ) Chapter 11 Case No. 05-55927-R (Jointly Administered) Honorable Steven W. Rhodes

OBJECTION OF GENERAL ELECTRIC CAPITAL CORPORATION TO DEBTORS NOTICE OF AMENDMENT TO PURCHASE AGREEMENT FOR SUBSTANTIALLY ALL OF THE ASSETS OF THE DEBTORS CARPET & ACOUSTICS BUSINESS AND EXTENSION OF BID DEADLINE TO MAY 31, 2007 General Electric Capital Corporation (GECC), by and through its attorneys, hereby objects (this Objection) to the Debtors Notice of Amendment to Purchase Agreement for Substantially All of the Assets of the Debtors Carpet & Acoustics Business and Extension of Bid Deadline to May 31, 2007 (the Notice).1 In support hereof, GECC respectfully represents as follows: Preliminary Statement Pursuant to the Notice, the Debtors are informing parties in interest in the abovecaptioned cases that the Debtors have entered into an Amendment to the Purchase Agreement modifying the terms of the Debtors proposed sale of their Carpet & Acoustics Business (the Sale) to International Automotive Components Group North America, Inc. or a higher bidder (the Purchaser). GECC has previously objected to the proposed Sale primarily on the grounds that, due to the vagueness of the Motion and related documents, GECC is unable to determine

Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Notice.

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with certainty whether and which of GECCs assets, contract and leases are included in the proposed Sale, and what consideration GECC will receive from the Sale if they are. Now the Notice and Amendment implies that GECC assets will be included in the proposed Sale, but still does not identify those assets specifically. In addition, the GECC Leases are not even identified the Amendment states that a list of GECC Leases is attached as Exhibit B, but no Exhibit B was attached. GECC therefore still needs more information about what assets and leases of GECC, if any, are going to be included in the Proposed Sale and what consideration GECC will receive for them if GECC consent to their inclusion in the Proposed Sale. Background 1. On May 17, 2005 (the Petition Date), the Debtors commenced these cases by

filing voluntary petitions for reorganization under chapter 11 of the Bankruptcy Code. 2. Since that time, the Debtors have continued in possession of their property and

have operated and managed their businesses, as debtors in possession, pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. 3. This Court has jurisdiction over this matter pursuant to 28 U.S.C. 157 and

1334. This is a core proceeding pursuant to 28 U.S.C. 157(b)(2). 4. The Debtors are in the business of supplying parts to automotive manufacturers. Lease Agreements 5. GECC and Collins & Aikman Products Co. (Products) have entered into (a) the

Master Lease Agreement dated as of August 7, 2001, as amended, (b) the Master Lease Agreement dated as of December 20, 2001, as amended, and (c) the Master Lease Agreement

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dated as of June 25, 2004, as amended (collectively, the Products Leases), pursuant to which GECC leases equipment to Products. 6. GECC and Becker Group, Inc. (Becker) have entered into a Master Lease

Agreement dated as of May 7, 1993, as amended (collectively, the Becker Lease, and, collectively with the Products Leases, the Equipment Leases), pursuant to which GECC leases equipment to Becker. Procedural History 7. On April 19, 2006, the Debtors filed a Complaint against GECC (the

Complaint) initiating an adversary proceeding (the Products Adversary Proceeding) seeking to recharacterize the Products Leases as secured financing agreements pursuant to New York law.2 8. On April 20, 2007, the Debtors filed a Motion for Entry of an Order Approving

Sale of Substantially All of the Assets of the Debtors Carpet & Acoustics Business Free and Clear of Liens, Claims, Encumbrances and Interests and Related Relief [Dkt # 4538] (the Motion). 9. On May 1, 2007, the Court entered an order approving the Debtors proposed

bidding procedures for the Sale [Dkt # 4594]. 10. On May 4, 2007, the Debtors filed a Contract and Cure Schedule Related to the

Debtors Motion for the Entry of Orders Approving Bidding Procedures, Sale of Substantially

The Products Leases are presumed to be true leases until the Debtors prove otherwise. See In re Uni-Rty Corp., No. 96-4573, 1998 U.S. Dist. LEXIS 8426, at *10 (S.D.N.Y. June 9, 1998), affd, No. 98-5032, 1999 U.S. App. LEXIS 5731, at *5 (2d Cir. Mar. 26, 1999); In re Owen, 221 B.R. 56, 60 (Bankr. N.D.N.Y. 1998) (The Debtors have the burden of demonstrating that the transaction was other than what it purports to be in the agreement.). The Debtors have yet to prove that the Products Leases are not true leases, and the Products Leases are therefore presumed to be true leases.

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All of the Assets of Debtors Carpet & Acoustics Business Free and Clear of Liens, Claims, Encumbrances and Interests and Related Relief [Dkt # 4619], with an attached Exhibit B listing the executory contracts and unexpired leases that the Debtors propose to assume and assign as part of the Sale, along with the Debtors proposed related cure costs (the List of Contracts Proposed for Assignment). 11. On May 18, 2007, GECC filed a Limited Objection to the Motion [Dkt # 7264]

(the Limited Objection) on the grounds that the Motion did not sufficiently identify what GECC assets or leases, if any, are to be included in the proposed Sale or what consideration GECC would receive for such assets or leases if GECC consented to the proposed Sale, that the proposed cure payments for defaults under GECC leases were incorrect and insufficient, and that the Debtors have not provided GECC with adequate assurance of future performance, to the extent that GECC leases will be included in the proposed sale. This Objection is in addition to and not in substitution of the objections of GECC set forth in the Limited Objection, and the objections set forth in the Limited Objection are hereby incorporated herein by reference. 12. [Dkt # 7357]. Objection The Notice and Amendment Implies That GECC Assets Will Be Included in the Sale, and the Debtors Still Have Not Provided Sufficient Information for GECC to Determine Which of GECCs Assets, Contracts or Leases Are Involved 13. As GECC stated in the Limited Objection, GECC was, and remains despite the On May 26, 2007, the Debtors filed and served the Notice and the Amendment

filing of the Notice and Amendment, unable to determine exactly which GECC assets, executory contracts or leases are included in the Sale, and what consideration GECC will receive therefore. As a result, GECC hereby files this objection to oppose the inclusion of GECCs assets, 4
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executory contracts or leases in the Sale unless and until the Debtors provide sufficient clarity and detail to GECC and GECC is able to determine whether GECC has any additional substantive objections to the Sale. 14. Pursuant to the Motion, the Debtors are seeking authority to sell substantially all

of the assets in the Debtors Carpet & Acoustics Business. The Motion and the exhibits thereto that have been provided to GECC thus far still do not include a list of specific assets being sold, but the Amendment implies that at least some GECC assets are going to be included in the Sale, stating that [t]o the extent any assets Related to the Business are subject to Capital Leases or GECC Leases, such assets shall be considered Purchased Assets and shall be conveyed at the Closing to Purchaser free and clear of Liens, other than Permitted Exceptions.3 GECC Assets Cannot Be Sold Without GECCs Consent 15. While the Amendment still does not identify which assets are included in the sale,

and thus GECC still cannot determine whether any of GECCs assets are included in the proposed Sale, to the extent that the proposed sale includes assets of GECC those assets cannot be sold without the consent of GECC. Furthermore, to the extent that the proposed Sale of the Debtors' Carpet & Acoustics Business includes the proposed sale of assets located in Hermosillo, Mexico (and again, Debtors' Motion is not clear as to exactly what assets are included in the Sale), those assets are owned by GE Capital de Mexico, S. de R. L. de C.V., and the Debtors do not have any right to sell such assets with the consent of GE Capital de Mexico, S. de R. L. de C.V.

GECC cannot be certain to which GECC Leases the Debtors are referring to, since the Amendment does not include the Exhibit B -- the list of GECC Leases that it states is attached hereto. 5

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GECC Reiterates the Objections Set Forth in GECCs Prior Limited Objection 16. GECC reiterates its objections as set forth in the Limited Objection. GECC assets

cannot be included in the proposed Sale with GECCs consent, and GECCs leases cannot be assumed and assigned unless and until the Debtors specifically identify which leases are proposed for assumption and assignment, cure the outstanding defaults under such leases (which are substantial) and provide GECC with adequate assurance of the Purchasers future performance under the leases. Conclusion For the foregoing reasons and for the reasons set forth above and in the Limited Objection, GECC respectfully requests that the Court (i) deny the Motion to the extent the Motion seeks to sell assets of GECC or assume and assign executory contracts or unexpired leases of GECC, including the Equipment Leases, unless and until the Debtors and GECC can reach agreement on what assets, contracts or leases of GECC are included in the sale and the consideration and cure amounts that GECC will receive therefore, and until the Debtors provide GECC with adequate assurance of the Purchasers future performance under any GECC contracts and leases that the Debtors propose to assume and assign to the Purchaser, and (ii) further and alternatively, grant such other relief as the Court deems just and proper. June 1, 2007 /s/ Erin L. Toomey_________________________ Nicole Y. Lamb-Hale (P46202) Erin L. Toomey (P67691) FOLEY & LARDNER LLP 500 Woodward Ave., Suite 2700 Detroit, Michigan 48226-3489 Telephone: (313) 234-7100 Facsimile: (313) 234-2800 etoomey@foley.com -and6
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David S. Heller Josef S. Athanas LATHAM & WATKINS LLP 233 South Wacker Drive Sears Tower, Suite 5800 Chicago, Illinois 60606 Telephone: (312) 876-7700 Facsimile: (312) 993-9767

ATTORNEYS FOR GENERAL ELECTRIC CAPITAL CORPORATION

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