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

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

COMMENTS TO PROPOSED ORDER REGARDING MEDIATION Schafer and Weiner, PLLC (Schafer and Weiner)1, in response to the Proposed Order Regarding Mediation (the Proposed Order), states as follows: 1. Paragraph 14 of the Proposed Order is objectionable because it provides that [t]he entire mediation process is confidential and (a) will not be disclosed to third parties except persons associated with the participants in the process . To the exent, if any, that the foregoing language is interpreted as preventing adversary proceeding defendants from sharing information gleaned from the mediation process among themselves, as well as among other defendants in adversary proceedings filed by debtors in the Collins & Aikman jointly administered bankruptcy cases (collectively, the Adversary Proceedings), it unfairly restricts the use of information and is not necessary to protect the parties or to facilitate the mediation process. 2. Information gleaned from the mediation process, including but not limited to the positions taken by plaintiffs, the positions taken by defendants, the results achieved, the mediators approaches to the process, and the mediators viewpoints on defenses and common factual and legal issues, is important strategic information for the defendants as well as for the plaintiffs.

Schafer and Weiner represents defendants in more than two dozen adversary proceedings filed by Debtors in the above-captioned jointly administered bankruptcy cases.

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3. Schafer and Weiners ability to zealously and effectively represent its clients will be impaired, and those clients will therefore be prejudiced, if Schafer and Weiner cannot share information among the defendants it represents, as well as among other defendants in Adversary Proceedings and their counsel. 4. The plaintiffs in the Adversary Proceedings, on the other hand, would gain an unfair advantage because they will presumably be represented in all of the mediations by the same attorneys. The plaintiffs will, therefore, effectively be privy to all of the strategic

information from all of the mediations: the positions taken by all the defendants, the results achieved in all the mediations, the mediators approaches to the process, the mediators viewpoints on defenses and common legal and factual issues, and so on. 5. Federal Rule of Evidence 408 should apply to the mediations, but that rule does not provide for blanket confidentiality. Plaintiffs only legitimate concern in this regard is that offers, promises, conduct and statements connected with the mediation process not be used against them in any litigation of the adversary proceedings (unless otherwise allowed under Federal Rule of Evidence 408). confidentiality requirement. 6. The confidentiality provisions in paragraph 14 of the Proposed Order, to the extent they are applied to prevent the defendants from sharing information among themselves, also violates the spirit of the United States Bankruptcy Code (the Code). One of the most basic policies of the Code is that of full and free disclosure of information to, and among, parties affected by bankruptcy proceedings. A blanket confidentiality provision subverts that policy by curtailing disclosure of important strategic information, to the detriment of the defendants and to the advantage of the plaintiffs in the Adversary Proceedings. That goal is served without providing for a blanket

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7. For the foregoing reasons, Schafer and Weiner respectfully requests that this Honorable Court delete the confidentiality language from paragraph 14 of the Proposed Order, but leave intact the specific references to Federal Rule of Evidence 408. The specific deletions requested are as follows: 14. All statements made during the course of the mediation are privileged settlement discussions, are without prejudice to any partys legal position, and are inadmissible for any purpose in any legal proceeding. Except for the final settlement agreement, these offers, promises, conduct and statements are privileged and inadmissible for any purposes, including impeachment, under Rule 408 of the Federal Rules of Evidence, or any applicable federal or state statute, rule or common law provision. 8. Schafer and Weiner also concurs generally in the comments set forth in paragraph 2 (regarding Location and Scheduling of Mediation) and 5 (regarding Default) of the Comments On Proposed Order Regarding Mediation submitted by Honigman Miller Schwartz and Cohn.

Respectfully submitted: SCHAFER AND WEINER, PLLC By / s / Michael R. Wernette MICHAEL R. WERNETTE (P55659) 40950 Woodward Ave., Ste. 100 Bloomfield Hills, MI 48304 (248) 540-3340 mwernette@schaferandweiner.com Dated: October 15, 2007

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