UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION ------------------------------------------------------------x In re Chapter 11 COLLINS & AIKMAN CORPORATION,

et al., Debtors. -------------------------------------------------------------x COLLINS & AIKMAN PRODUCTS CO. and COLLINS & AIKMAN AUTOMOTIVE EXTERIORS, INC. Plaintiff, - against EMHART TEKNOLOGIES, INC., Defendant. ------------------------------------------------------------x DEBTORS' MOTION TO APPROVE SETTLEMENT AND COMPROMISE OF CLAIMS WITH RESPECT TO EMHART TEKNOLOGIES, INC. The above-captioned debtors Collins & Aikman Products Co. and Collins & Aikman Automotive Exteriors, Inc. (the Debtors) Motion to Approve Settlement and Compromise of Claims With Respect To Emhart Teknologies, Inc. (the Motion), respectfully state as follows: INTRODUCTION 1. By this Motion, the Debtors request authority to settle and compromise certain Adv. Pro. No. 07-5718 (SWR) Case No. 05-55927 (SWR) (Jointly Administered) Hon. Steven W. Rhodes

claims the Debtors have against Emhart Teknologies, Inc. (the Defendant), and requests that the Court enter an Order in the form annexed hereto as Exhibit A. If the Motion is granted, the Debtors will compromise an alleged $101,378.00 claim against the Defendant for $91,240.00 and the parties will exchange mutual releases with respect to claims based on the post-petition payments referred to in the Complaint.

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JURISDICTION 2. 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). 3. Venue is proper pursuant to 28 U.S.C. 1408 and 1409. BACKGROUND 4. On May 17, 2005 (the Petition Date), the Debtors filed voluntary petitions for

relief (collectively, the Chapter 11 Cases) under chapter 11 of the Bankruptcy Code, 11 U.S.C. 101-1330 (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. The Debtors cases have been consolidated for procedural purposes only and are being jointly administered pursuant to Rule 1015(b) of the Federal Rules of Bankruptcy Procedure (as amended, the Bankruptcy Rules). No trustee or examiner has been appointed in any of the Chapter 11 Cases. 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. Prior to and subsequent to the Petition Date, the Defendant allegedly provided

certain services, materials and/or equipment to the Debtors at the Debtors' Morristown, Indiana manufacturing plant. 7. On or about May 17, 2007, the Debtors commenced the above-captioned

adversary proceeding to recover $101,378.00 of alleged post-petition overpayments (the Action). 8. The Defendant disputed part of the Debtors claim and the parties have

endeavored to reconcile their respective books and records. As a result of such reconciliation, the parties now agree to settle this action for $91,240.00. 2

THE SETTLEMENT 9. 10. The parties have engaged in negotiations to resolve the Action. Based upon all of the foregoing, including the investigation by the Debtors into

the facts and circumstances surrounding the Action and the parties efforts to reconcile their books and records, in the sound exercise of their business judgment, the Debtors believe that it would be in the best interests of their estates and their creditors to resolve the Action pursuant to the terms of the Settlement Agreement (the Settlement Agreement). The Settlement Agreement settles only the claims asserted in the Action and the parties to the Settlement Agreement reserve all other claims against each other. THE TERMS 11. If the Court approves the Settlement Agreement, a copy of which is attached

hereto as Exhibit B: a. b. The Defendant shall pay the Debtors the sum of $91,240.00; The Settlement Agreement by and between the Debtors and Defendant, a copy of which is attached hereto as Exhibit B, will become effective and the parties will release each other with respect to claims based on the postpetition payments referred to in the Action. 12. Based upon all of the foregoing, including the investigation by Debtors into the

facts and circumstances surrounding the dispute, the Debtors, in the sound exercise of their business judgment, believe that it would be in the best interests of the Debtors' estates and their creditors to resolve these disputes upon the terms and conditions set forth herein. 13. Under Fed. R. Bankr. P. 9019, on motion and after notice and a hearing, the Court

may approve a compromise or settlement after notice is provided to all parties required to be served. 3

14.

Settlements are generally favored by the law. In re Dow Coming Corp., 198 B.R.

214, 221 (Bankr. E.D. Mich. 1996). The benchmark for determining the propriety of a bankruptcy settlement is whether the settlement is in the best interests of the estate. In re Lee Way Holding Corp., 120 B.R. 881, 890 (Bankr. S.D. Ohio 1990). In considering whether to approve a settlement as in the best interest of the debtor's bankruptcy estate, a bankruptcy court should consider, among other things: (i) the probability of the party's success in the litigation; (ii) the complexity of the litigation; and (iii) the litigation's expense, inconvenience and delay. Protective Committee for Independent Stockholders of TMT Trailer Ferry, Inc. v. Anderson, 390 U.S. 414 (1968); Matter of Energy Cooperative, Inc., 866 F.2d 1921 (7th Cir. 1989); In re Lee Way Holding Corp., supra. 15. A bankruptcy court should approve a proposed settlement if it is fair and equitable

and unless it falls below the lowest point in the range of reasonableness. In re Dow Corning, 198 B.R. 214, 222 (Bankr. E.D. Mich. 1996); see also, In re New Concept Housing, Inc., 951 F.2d 932, 938 (8th Cir. 1991). 16. Giving appropriate consideration to the above factors, the risk to the Debtors, the

complexity of the issues and the other risks inherent in litigation and weighing the expenses which the Debtors would necessarily incur in further prosecuting these claims through trial, and the delay and inconvenience which would be involved therewith, the Debtors believe that the Settlement is in the best interest of the Debtors' Estate. REQUEST FOR HEARING 17. The Debtors respectfully request that the Court schedule a Hearing on this matter

on an existing omnibus hearing date in the Chapter 11 Case.

NOTICE 18. Notice of this Motion has been given to the Core Group and Affected Parties as

required by the Case Management Procedures. In light of the nature of the relief requested, the Debtor submits that no further notice is required. NO PRIOR REQUEST 19. court. WHEREFORE, the Debtors respectfully request that this Court approve the Settlement Agreement and enter the proposed Order attached hereto as Exhibit A and grant to the Debtors such other and further relief as is just and appropriate in the circumstances. Dated: Uniondale, New York January 24, 2008 No prior motion for the relief requested herein has been made to this or any other

ROSEN SLOME MARDER LLP

/s/ Lon J. Seidman Alan E. Marder Lon J. Seidman 333 Earle Ovington Boulevard Suite 901 Uniondale, New York 11553-3622 (516) 227-1600 and Boyle Burdett H. William Burdett, Jr., Esq. 14950 East Jefferson Suite 200 Grosse Pointe Park, MI 48230 Attorneys for Collins & Aikman Products Co. and Collins & Aikman Automotive Exteriors, Inc.
G:\Collins & Aikman\Lit\Complaints\Emhart\Motion to approve settlement.doc

By:

EXHIBIT A

UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION ------------------------------------------------------------x In re Chapter 11 COLLINS & AIKMAN CORPORATION, et al., Debtors. -------------------------------------------------------------x COLLINS & AIKMAN PRODUCTS CO. and COLLINS & AIKMAN AUTOMOTIVE EXTERIORS, INC. Plaintiff, - against EMHART TEKNOLOGIES, INC., Defendant. ------------------------------------------------------------x ORDER GRANTING DEBTORS' MOTION TO APPROVE SETTLEMENT AND COMPROMISE OF CLAIMS WITH RESPECT TO EMHART TEKNOLOGIES, INC. This matter having come before the Court on the Debtors' Motion to Approve Settlement and Compromise of Claims With Respect to Emhart Teknologies, Inc. (the Motion), which was filed and served as required by applicable rules; it appearing that good cause exists for the relief requested in the Motion and that the settlement proposed by the Debtors as to Emhart Teknologies, Inc. in Adversary Proceeding No. 07-5718 is fair, reasonable, and in the best interest of the Debtors' Estates and their creditors; it appearing that appropriate notice and opportunity for a hearing was given to all parties entitled to notice; no party having filed or otherwise interposed any objection; and the Court being otherwise duly advised in the premises: Adv. Pro. No. 07-5718 (SWR) Case No. 05-55927 (SWR) (Jointly Administered) Hon. Steven W. Rhodes

NOW THEREFORE, IT IS HEREBY ORDERED that: 1. The Motion is granted and approved in all respects, and the Debtors are

authorized to enter into the Settlement Agreement (as defined in the Motion). 2. The Settlement Agreement (as defined in the Motion), the terms of which are

incorporated herein by reference, are hereby authorized and approved. 3. The Debtors are, or another appropriate Estate representative is, authorized to

execute any and all documents necessary to consummate the Settlement Agreement. 4. The Court shall retain jurisdiction to adjudicate any disputes relating to this order

or the settlement as set forth in the Motion.

G:\Collins & Aikman\Lit\Complaints\Emhart\Order Granting Settlement.doc

EXHIBIT B

UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION ------------------------------------------------------------x In re Chapter 11 COLLINS & AIKMAN CORPORATION, et al., Debtors. -------------------------------------------------------------x COLLINS & AIKMAN PRODUCTS CO. and COLLINS & AIKMAN AUTOMOTIVE EXTERIORS, INC. Plaintiff, - against EMHART TEKNOLOGIES, INC., Defendant. ------------------------------------------------------------x SETTLEMENT AGREEMENT AND MUTUAL RELEASE THIS SETTLEMENT AGREEMENT AND MUTUAL RELEASE (together, the Settlement Agreement) is made and entered into this __ day of January, 2008, by and between Collins & Aikman Products Co. and Collins & Aikman Automotive Exteriors, Inc., (collectively the Debtors), on the one hand, and Emhart Teknologies, Inc. (the Defendant), on the other. WHEREAS, on May 17, 2005 (the Petition Date), the Debtors filed petitions for relief under Chapter 11 of the United States Bankruptcy Code, which are being jointly administered and referenced as In re Collins & Aikman Corporation et al., Case No. 05-55927 (individually and collectively, the "Case"), currently pending before the United States Bankruptcy Court for the Eastern District of Michigan, Southern Division (the Bankruptcy Court); WHEREAS, prior to and subsequent to the Petition Date, Defendant provided certain services, materials and/or equipment to the Debtors; WHEREAS, the Debtors commenced the above-captioned action (the Action), pursuant to 11 U.S.C. 549 and 550, to recover $101,378 of overpayments allegedly made to the Defendant after the Petition Date; WHEREAS, the Defendant disputes the Debtors claim; Adv. Pro. No. 07-5718 (SWR) Case No. 05-55927 (SWR) (Jointly Administered) Hon. Steven W. Rhodes

WHEREAS, the parties have agreed to settle this matter; WHEREAS, the Debtors and Defendant have selected, and have had the opportunity to consult with, counsel of their choice with respect to the Settlement Agreement; WHEREAS, the Debtors and Defendant desire to avoid the uncertainties and expense of litigation and to settle and compromise on the terms set forth below, without admitting any liability therefor; NOW, THEREFORE, in consideration of the foregoing and the mutual covenants herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Debtors and Defendant, intending to be legally bound, hereby agree as follows: 1. Recitals Incorporated. The recitals and prefatory phrases and paragraphs set forth above are hereby incorporated in full, and made a part of this Settlement Agreement. Settlement Payment. Within 10 days of the date of entry of an order approving the Settlement Agreement, the Defendant shall deliver to Debtors counsel, Rosen Slome Marder LLP, a check, payable to Rosen Slome Marder LLP as attorneys for the Debtors in the amount of $91,240.00 (the Settlement Amount). Promptly after entry of a final order approving the Settlement Agreement that has not been stayed, appealed or otherwise modified (the Order), Rosen Slome Marder LLP shall disburse the Settlement Amount to the Debtors and file a Stipulation dismissing the Action. Mutual Release. Upon entry of the Order and payment in full of the Settlement Amount, the Debtors, on the one hand, and Defendant, on the other, for themselves and on behalf of their respective agents, attorneys, employees, officers, directors, other representatives, affiliates, successors and assigns including, but not limited to, any successor trustee(s) in the Case hereafter appointed, and in consideration of the releases set forth herein and in the case of Defendant, the payment of the Settlement Amount), and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, do hereby fully and forever release, acquit and discharge each other and each of their agents, attorneys, employees, officers, directors, other representatives, affiliates, successors and assigns, from any and all actions, causes of action, defenses, set offs and all other claims, to recover the post-petition transfers referred to in the complaint filed in the Action. The Settlement Agreement resolves the claims asserted in the Action and any other claims of post-petition overpayments made by any of the Plaintiffs to the Defendant. The parties expressly reserve all other claims against each

2.

3.

other, including preference actions asserted by Plaintiff against Defendant (as well as the defenses thereto available to Defendant). In addition, notwithstanding this Release and the settlement of the Action, this Settlement Agreement shall not be construed to release or affect in any way (1) Defendants claims for payment from parties other than Plaintiff on account of tooling and equipment that is or was previously utilized in the manufacture of parts by the Plaintiff for its customers, including but not limited to Ford Motor Company and its affiliates, or (2) Defendants right, if any, to payment for goods and services supplied to Plaintiff after September 1, 2007, nor any defenses pertaining to such goods and services (such as breach of warranty, late delivery, etc) 4. Representations and Warranties. Each party acknowledges that it has read this Settlement Agreement and has consulted counsel before executing same; each party has relied upon its own judgment and that of its counsel in executing the Settlement Agreement and has not been induced by any representation, statement or act by any other party which is not referred to in this instrument; each party enters into the Settlement Agreement with all requisite authority, freely and voluntarily, with full knowledge of its significance; and the Settlement Agreement is in all respects complete and final. Compromise Agreement. The Settlement Agreement is a compromise and settlement of claims and is not intended to be, nor shall it be construed as, an admission of liability or wrongdoing by any party hereto or any other person or entity. Amendment of Settlement Agreement. The Settlement Agreement shall not be amended except by a writing signed by all of the parties hereto. Approval and Jurisdiction. The Settlement Agreement is subject to and conditioned upon the approval of the compromise reflected herein by the Bankruptcy Court under the procedure set forth under the Federal Rules of Bankruptcy Procedure and is conditioned upon the Debtors receipt, in full, of the Settlement Payment. In the event that the Bankruptcy Court does not approve the Settlement Agreement, then the Settlement Agreement shall be null and void. The Settlement Agreement shall be construed and governed by the laws of the State of Michigan, and the Bankruptcy Court shall have jurisdiction over the Settlement Agreement and the parties. Binding Effect. The Settlement Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Entire Agreement. This Settlement Agreement constitutes the entire agreement of the parties hereto as to the subject matter hereof. The undersigned acknowledge that there are no communications or oral 3

5.

7. 8.

9.

10.

understandings contrary, different, or which in any way restrict this Settlement Agreement, and that all prior agreements or understandings within the scope of the subject matter of the Settlement Agreement are, upon the execution and delivery of the Settlement Agreement, superseded, null, and void. 11. Execution in Counterparts. The Settlement Agreement may be executed in one or more counterparts, each counterpart to be considered an original portion of the Settlement Agreement. The signature page of any counterpart may be detached therefrom without impairing the legal effect of the signature(s) thereon, provided such signature page is attached to any other counterpart identical thereto except having additional signature page(s) executed by one or more of the other parties. Each of the parties agrees that each of the other parties may rely upon the facsimile signature of any party on the Settlement Agreement as constituting a duly authorized, irrevocable, actual, current delivery of the Settlement Agreement as fully as if the Settlement Agreement contained the original ink signature of the party or parties supplying a facsimile signature. No Assignment. Each of the parties to the Settlement Agreement represents and warrants that no claim or cause of action that is the subject of, or related to, the subject matter of the Settlement Agreement has been assigned, transferred to, or resides in any other person or entity, whether by agreement or operation of law or otherwise, including through an assignment or transfer pursuant to any right or claim of subrogation. Authority. Each party hereto warrants and represents to the other that the execution and performance of the Settlement Agreement by it has been duly authorized such that the signatory hereto possesses all requisite power and authority to bind the entity on whose behalf they execute the Settlement Agreement.

12.

13.

IN WITNESS WHEREOF, the parties hereto, each by persons duly authorized, have executed the Settlement Agreement as of the day and year first above written. COLLINS & AIKMAN PRODUCTS CO. and COLLINS & AIKMAN AUTOMOTIVE EXTERIORS, INC. By: Rosen Slome Marder LLP, Its: Special counsel to Collins & Aikman Products Co. and Collins & Aikman Automotive Exteriors, Inc. By: /s/ Lon J. Seidman Alan E. Marder Lon J. Seidman

Dated: January 24, 2008 EMHART TEKNOLOGIES, INC.

By: /s/ Thomas D. Renda Its: Attorney Dated: January 24, 2008
G:\Collins & Aikman\Lit\Complaints\Emhart\Settlement Agreement v. 2.doc

UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION ------------------------------------------------------------x In re Chapter 11 COLLINS & AIKMAN CORPORATION, et al., Debtors. -------------------------------------------------------------x COLLINS & AIKMAN PRODUCTS CO. and COLLINS & AIKMAN AUTOMOTIVE EXTERIORS, INC. Plaintiff, - against EMHART TEKNOLOGIES, INC., Defendant. ------------------------------------------------------------x NOTICE OF DEBTORS' MOTION TO APPROVE SETTLEMENT AND COMPROMISE OF CLAIMS WITH RESPECT TO EMHART TEKNOLOGIES, INC Plaintiffs Collins & Aikman Products Co. and Collins & Aikman Automotive Exteriors, Inc. have filed papers with this court to approve the settlement and compromise of claims asserted in the above-referenced action against Emhart Teknologies, Inc. (the Motion) Your rights may be affected. You should read these papers carefully and discuss them with your attorney, if you have one in this bankruptcy case. (If you do not have an attorney, you may wish to consult one). If you do not want the court to grant the requested relief, or if you want the court to consider your views on the above Motion, within 15 days, you or your attorney must: Adv. Pro. No. 07-5718 (SWR) Case No. 05-55927 (SWR) (Jointly Administered) Hon. Steven W. Rhodes

1. position at:

File with the court a written response or an answer, explaining your

United States Bankruptcy Court 211 W. Fort Street, Suite 2100 Detroit, MI 48226 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 stated above. You must also mail a copy to: THOMAS D. RENDA Attorney for Defendant Miles and Stockbridge P.C. 11 North Washington Street Suite 700 Rockville, Maryland 20850-4229 ALAN E. MARDER Attorney for Plaintiffs Rosen Slome Marder LLP 333 Earle Ovington Blvd., Suite 901 Uniondale, New York 11553-3622 BOYLE BURDETT 14950 East Jefferson Suite 200 Grosse Pointe Park, MI 48230 If a response or answer1 is timely filed and served, the Clerk will schedule

2.

a hearing on the Motion and you will be served with a notice of the date, time and location of the hearing.

Response or answer must comply with F.R. Civ. P. 8(b), (c) and (e).

If you or your attorney do not take these steps, the court may decide that you do not oppose the relief sought in the Motion and may enter an order granting that relief. Dated: Uniondale, New York January 24, 2008 ROSEN SLOME MARDER LLP

By:

/s/ Lon J. Seidman Alan E. Marder Lon J. Seidman

333 Earle Ovington Boulevard Suite 901 Uniondale, New York 11553-3622 (516) 227-1600 And Boyle Burdett H. William Burdett, Jr., Esq. 14950 East Jefferson Suite 200 Grosse Pointe Park, MI 48230 Attorneys for Plaintiffs Collins & Aikman Products Co. and Collins & Aikman Automotive Exteriors, Inc.

G:\Collins & Aikman\Lit\Complaints\Emhart\NOM approve settlement.doc

UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION ------------------------------------------------------------x In re Chapter 11 COLLINS & AIKMAN CORPORATION, et al., Debtors. -------------------------------------------------------------x COLLINS & AIKMAN PRODUCTS CO. and COLLINS & AIKMAN AUTOMOTIVE EXTERIORS, INC. Plaintiff, - against EMHART TEKNOLOGIES, INC., Defendant. ------------------------------------------------------------x CERTIFICATE OF SERVICE
I, Lon J. Seidman, hereby certify on this 24th day of January, 2008, I caused a true and correct copy of the Notice Of Debtors' Motion To Approve Settlement And Compromise Of Claims With Respect To Emhart Teknologies, Inc. and Debtors' Motion To Approve Settlement And Compromise Of Claims With Respect To Emhart Teknologies, Inc. to be served by regular U.S. mail, postage prepaid to the entities listed on the attached Service List.

Case No. 05-55927 (SWR) (Jointly Administered) Hon. Steven W. Rhodes

Adv. Pro. No. 07-5718 (SWR)

/s/ Lon J. Seidman Lon J. Seidman

Service List
Miles and Stockbridge P.C. 11 North Washington Street Suite 700 Rockville, Maryland 20850-4229 Attn: Thomas D. Renda, Esq. Dykema Gossett PLLC Suite 300 39577 Woodward Avenue Bloomfield Hills, MI 48304 Attn: Brendan G. Best Akin Gump Strauss Hauer & Feld LLP 590 Madison Avenue New York, New York 10022 Attn: Michael S. Stamper Philip C. Dublin Butzel Long PC 41000 Woodward Avenue Ste. West Bloomfield Hills, MI 48304-5178 Attn: Thomas B. Radom Dykema Gossett PLLC 400 Renaissance Center Detroit, MI 48243 Attn: Ronald Rose Brendan Best Simpson Thacher & Bartlett LLP 425 Lexington Avenue New York, New York 10017-3954 Attn: Peter Pantaleo Erin Casey Alice Eaton Office of the United States Trustee 211 W. Fort Street, Suite 700 Detroit, MI 48226 Attn: Stephen E. Spence Wachtell Lipton Rosen & Katz 51 W. 52nd Street New York, New York 10019 Attn: Hal Novikoff, Esq.
G:\Collins & Aikman\Lit\Complaints\Emhart\cos.settlement.doc