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

LIMITED OBJECTION OF GENERAL ELECTRIC CAPITAL CORPORATION TO DEBTORS MOTION FOR ENTRY OF AN ORDER APPROVING SALE OF CERTAIN OF THE ASSETS OF THE DEBTORS INTERIOR PLASTICS GROUP FREE AND CLEAR OF LIENS, CLAIMS, ENCUMBRANCES AND INTERESTS AND RELATED RELIEF General Electric Capital Corporation (GECC), by and through its attorneys, hereby objects (this Objection) on a limited basis to the Debtors Motion for Entry Of An Order Approving Sale of Certain of the Assets of the Debtors Interior Plastics Group Free and Clear of Liens, Claims, Encumbrances and Interests and Related Relief (the Motion).1 In support hereof, GECC respectfully represents as follows: Preliminary Statement Pursuant to the Motion, the Debtors seek to sell assets of their Interior Plastics Group to Cadence Innovation LLC or a higher bidder (the Purchaser) for at least $68 million in cash, subject to adjustments, and certain assumed liabilities (the Sale). Due to the vagueness of the Motion and related documents, GECC is unable to determine 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. GECC therefore needs additional specific information about the proposed Sale in order to determine whether GECC opposes the Sale.

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

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In addition, GECC disputes and objects to the Debtors proposed cure of $0 for the contracts and leases that they propose to assume and assign as part of the Sale. While GECC cannot determine from the Debtors vague documents exactly which contracts and leases are included, there are significant arrearages under GECCs contracts and leases with the Debtors that must be cured before those contracts and leases can be assumed and assigned. Finally, the Debtors have not yet provided GECC with adequate assurance of the Purchasers future performance under any GECC contracts or leases that are to be assumed and assigned pursuant to the Sale. GECC requests that the Debtors provide such adequate assurance, as required by the Bankruptcy Code, and GECC opposes the Sale and any related assumption and assignment of any GECC contract or lease until the Debtors do so. 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 2, 2007, the Debtors filed the Motion seeking the approval of bidding

procedures for and the sale of the Debtors Interior Plastics Group assets free and clear of liens, claims, encumbrances and interests [Dkt # 4408]. 9. On April 19, 2007, the Court entered an order approving the Debtors proposed

bidding procedures for the Sale [Dkt # 4532]. 10. On May 8, 2007, the Debtors filed a Notice of Sale of Assets of Debtors Interior

Plastics Group Free and Clear of Liens, Claims, Encumbrances and Interests [Dkt # 4670], with an attached Exhibit A listing the executory contracts and unexpired leases that the Debtors

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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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). Objection A. The Debtors Have Not Provided Sufficient Information for GECC to Determine Which of GECCs Assets, Contracts or Leases are Included in the Sale 11. GECC is currently 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, 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. 12. Pursuant to the Motion, the Debtors are seeking authority to sell or abandon

certain of the assets of the Debtors Interior Plastics Group. The Motion and the exhibits thereto that have been provided to GECC thus far do not include a list of specific assets being sold, and thus GECC 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' Interior Plastics Group 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. 13. In addition, the Debtors List of Contracts Proposed for Assignment is vague and

does not provide GECC with sufficient information to determine which of GECCs contracts and leases with the Debtors are to be included. Attached hereto as Exhibit 1 are 4 select pages of the 4
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List of Contracts Proposed for Assignment, which represent the portions of such List that include contracts or leases of GECC or related entities. As Exhibit 1 demonstrates, the List of Contracts Proposed for Assignment does not include sufficient detail for a contract party such as GECC to determine which contracts are involved. The List of Contracts Proposed for Assignment does not, for example, list the correct titles of the contracts and leases, and does not list the dates of such contracts and leases for identification. Furthermore, GECCs Equipment Leases include numerous lease schedules, and the List does not indicate which lease schedules are proposed for inclusion.3 14. Notably, the Motion seems to indicate that assets, contracts and leases of GECC

will not be sold or assigned as part of the Sale without GECC reaching agreement with the Purchaser with respect thereto. For example, the Motion states that the Sale contemplates [r]esolution of the Debtors obligations (a) to an affiliate of General Electric Capital Corporation related to the Debtors facility in Hermosillo, Mexico with a face amount of obligations of approximately $76 million plus (b) to General Electric Capital Corporation and Textron Financial Corporation (or their affiliates) related to equipment that is the subject of various financial arrangements with a face amount of obligations of approximately $10 to $20 million. See Motion at 6; see also Motion at 26, para. 52. However, to date GECC has not reached an agreement with the proposed Purchaser and/or the Debtors with respect to the treatment of GECCs assets, contracts or leases in the Sale or otherwise. Furthermore, the

Since GECC cannot determine exactly what GECC contracts or leases or schedules thereto that the Debtors propose to assume and assign as part of the Sale, GECC cannot determine whether the Debtors are attempting to assume all or a portion of any such executory contracts or unexpired leases. It is well settled that a Debtor must assume a contract or lease in whole and cannot cherry pick the more valuable portions of a contract or lease to assume. See, e.g., In re Cutters, Inc., 104 B.R. 886, 888 (Bankr. M.D. Tenn. 1989). To the extent that the Debtors propose to assume and assign a portion of any given executory contract or lease of GECC, GECC reserves its rights to oppose such assumption and assignment.

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Debtors List of Contracts Proposed for Assignment does include some vaguely described contracts and leases of GECC, indicating, perhaps contrary to the provisions of the Motion, that certain contracts or leases of GECC might be assumed and assigned even if the Purchaser or the Debtors do not reach agreement with GECC. As a result of the ambiguity with respect to the assets, contracts and leases of GECC that the Debtor proposes to include in the Sale, GECC hereby objects to preserve its rights, opposing the sale of GECCs assets or the assumption and assignment of GECCs contracts or leases unless and until the Debtors provide sufficient specificity to GECC for GECC to determine whether GECC has additional substantive objections to the Sale. B. The Debtors Proposed Cure Amounts Are Incorrect 15. The Debtors List of Contracts Proposed for Assignment indicates that the

Debtors propose that the cure costs associated with the assumption and assignment of the vaguely described GECC contracts or leases listed thereon is $0. See Exhibit 1 hereto. Since GECC cannot at this time determine exactly what contracts or leases the Debtors are proposing to assume, GECC in turn cannot provide the exact correct associated cure amounts. However, there are significant cure amounts outstanding with most, if not all, of the GECC contracts or leases, which must be cured before such contracts or leases may be assumed. GECC will promptly provide the Debtors with specific detail about such cure amounts once the Debtors clarify which contracts or leases the Debtors propose to assume pursuant to the Sale. 4

Although this Courts April 19, 2007 Bidding Procedures Order required the Debtors to serve the sale notice including the list of proposed contracts and leases for assumption and assignment and the related proposed cure amounts by 5 days after entry of the order, or by April 24, 2007, the Debtors did not file and serve such notice and the List of Contracts Proposed for Assignment until May 8, 2007. As a result, GECC has had very little time or opportunity to review the list and attempt to gather more specific information thereabout from the Debtors prior to filing this Objection. 6

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C.

The Debtors Have Not Yet Provided GECC With Adequate Assurance of the Purchasers Future Performance Under GECCs Contracts or Leases 16. The Debtors have not yet satisfied their obligation to provide GECC with

adequate assurance of the Purchasers future performance under the contracts and leases that the Debtors propose to assume and assign in connection with the Sale. See Bankruptcy Code section 365(f)(2)(B). Given that the Debtors have filed their List of Contracts Proposed for Assignment on May 8, 2007, a few days before the date hereof, and given that such List does not sufficiently identify the contracts and leases of GECC that the Debtors propose to assume and assign in the Sale, there has been little opportunity for the Debtors and GECC to discuss any such evidence. GECC looks forward to receiving information from the Debtors that may very well provide GECC with adequate assurance of the Purchasers future performance. Until that occurs, however, GECC objects to the proposed assignment of any of GECCs contracts or leases pursuant to the Sale.

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Conclusion For the foregoing reasons, 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. May 11, 2007 /s Erin L. Toomey Judy A. ONeill (P32142) Erin L. Toomey (P67691) FOLEY & LARDNER LLP 500 Woodward Ave., Suite 2700 Detroit, Michigan 48226-3489 etoomey@foley.com Telephone: (313) 234-7100 Facsimile: (313) 234-2800 -andDavid 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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EXHIBIT 1