IN THE UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION

In re:

) ) COLLINS & AIKMAN CORPORATION, et al. ) ) Debtors. ) __________________________________________)

Chapter 11 Case No. 05-55927 (SWR) Hon. Steven W. Rhodes

PROJECT ADVISORS HK LIMITEDS RESPONSE TO THE COLLINS & AIKMAN LITIGATION TRUSTS FIFTY-THIRD OMNIBUS OBJECTION TO CLAIMS (INSUFFICIENT BOOKS AND RECORDS) Project Advisors HK Limited (HK) by and through its counsel, Jaffe, Raitt, Heuer & Weiss P.C., files this Response (Response) to the Collins & Aikman Litigation Trusts FiftyThird Omnibus Objection to Claims (Insufficient Books and Records) (Objection) and in support thereof states as follows: I. Background A. Contracts 1. On June 20, 2003 PAC-EDGE North America, LLC (PAC-EDGE) and Collins

& Aikman Products Co. (Debtor or Collins & Aikman) entered into a Memo of Understanding, outlining the terms of a business relationship in which PAC-EDGE and its affiliates would provide Collins & Aikman resources (personnel and computers) required to perform major parts of the engineering, CAD and other related services on the following vehicle programs through the launch phase: Ford CD338, Ford CD378, Ford V229, Chrysler 07JS, GMX 384 and Honda TU (Designated Vehicle Program). See Memo of Understanding attached hereto at Exhibit A.

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PAC-EDGE delegated to HK the responsibility for providing the management

resources contemplated under the Memo of Understanding. 3. HK and Collins & Aikman amended and restated their business relationship under

the Memo of Understanding in the Professional Services Agreement (Services Agreement) and the Management Services Agreement (Management Agreement) both of which were executed on July 1, 2003 (collectively, the Contracts). See Management Agreement attached hereto at Exhibit B and Services Agreement attached hereto at Exhibit C. 4. The Services Agreement provided that PAC-EDGE would provide Collins &

Aikman professional services on the Designated Vehicle Program. Pursuant to the terms of the Services Agreement, the professional services personnel recorded their actual time spent providing the professional services on the Designated Vehicle Program using Collins & Aikmans standard project management systems (TEDS). Collins & Aikman then furnished PAC-EDGE with a monthly report showing the time recorded by PAC-EDGE personnel. See paragraph 1(c) of the Services Agreement. 5. Collins & Aikman was to pay PAC-EDGE fees for the actual time spent

providing the professional services on the Designated Vehicle Program, based upon the monthly report furnished to PAC-EDGE pursuant to Section 1(c) at the rates set forth in Schedule A of the Services Agreement. See paragraph 2(a) of the Services Agreement at p. 2. 6. PAC-EDGE was paid on a monthly basis for services provided under the Services

Agreement. See paragraph 2(a) of the Services Agreement at p. 2 and copies of checks received at Exhibit D.

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The Management Agreement provided that HK would provide the Debtor

management services to manage the PAC-EDGE personnel provided under the Professional Services Agreement on the Designated Vehicle Program. 8. Schedule A of the Management Agreement set forth that the fees due under the

Management Agreement were to be equal to the sum of the fees payable under the Services Agreement during each of the specified periods multiplied by the corresponding applicable percentage. 9. follows: The fees will be accumulated at the rates set forth in Schedule A through the launch of the applicable vehicle program (as defined by the customer), by which time the Services for such Designated Vehicle Program are expect [sic] to have ceased. Promptly following such launch, the parties will mutually calculate the per unit amortization of the fees under such Designated Vehicle Program using the amortization terms set forth in Schedule A. Management Agreement at 2(a)(1). 10. A total of $1,530,061 in fees was earned by HK and deferred for payment The payment of the fees under the Management Agreement was deferred as

(Deferred Amounts). See Deferment Schedule attached hereto at Exhibit E. 11. The approximate amounts and timing of the payment of the Deferred Amounts are

set forth in the amortization schedule (Amortization Schedule) attached hereto at Exhibit F. The Amortization Schedule sets forth the scheduled payments of the Deferred Amounts, including the approximate amount of principal and interest based upon the TEDS records and JD Powers forecast as known to the parties as of February 11, 2004. 12. Agreement. Of the Deferred Amounts, only $196,209 was paid pursuant to the Management

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No payments were made by Collins & Aikman for the CD338 or CD378

programs. The payments owing to HK for each month during 2003 and 2004 on these programs, excluding interest, are detailed on the Deferment Schedule. B. Collins & Aikmans Chapter 11 Bankruptcy 14. On May 17, 2005 the Debtors filed petitions for relief under chapter 11 of title 11

of the United States Code. 15. On November 23, 2005 the Debtors filed a Motion for Entry of an Order

Authorizing Debtors to Reject Certain Executory Contracts and Unexpired Leases (Motion to Reject) seeking authority to reject the Contracts. 16. PAC-EDGE and HK filed a response to the Motion to Reject and after a hearing

and further discussions, the Motion to Reject was resolved by entry of a Stipulation between the parties to reject the Contracts as of January 5, 2006. 17. As a result of the rejection, HK suffered over $1,300,000 in damages for unpaid

amounts under the Management Agreement. See Deferment Schedule attached hereto at Exhibit E and unpaid invoices attached hereto at Exhibit G. 1 18. Accordingly, on January 9, 2006 HK filed a proof of claim in the amount of

$1,300,000, as of that date, which was assigned claim no. 5994 for its rejection damages (Claim). 19. On June 27, 2008 the Collins & Aikman Litigation Trust filed its Objection.

Invoices were not created for fees due for January-June 2005. The amounts due for these periods can be found on the Deferment Schedule.

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II. Argument 20. It is the Debtors burden, as the objecting party, to produce evidence that the claim

should be denied. Bankruptcy Rule 3001 provides that a proof of claim executed and filed in accordance with these rules shall constitute prima facie evidence of the validity and amount of the claim. 21. The Debtors have failed to present any such evidence at all and therefore the

Claim should be allowed in its entirety: A properly filed proof of claim is prima facia evidence of the validity and amount of a claim. The party objecting to the claim has the burden of going forward and of introducing evidence sufficient to rebut the presumption of validity. Such evidence must be sufficient to demonstrate a true dispute and must have probative force equal to the contents of the claim. Upon introduction of sufficient evidence by the objecting party, the burden of proof will fall on whichever party would bear that burden outside of bankruptcy. In most cases, the burden of proof will have to be met by the claimant by a preponderance of the evidence.

See also Brown v. IRS (In re Brown), 82 F.3d 801 (8th Cir. 1996) (a claims presumptive validity is not altered unless an objection is supported by substantial evidence); In re Hemingway Transp., Inc., 993 F.2d 915 (1st Cir. 1993) (an objection to a claim does not deprive the claim of its presumptive validity unless the objection is supported by substantial evidence); In re Fullmer, 962 F.2d 1463 (10th Cir. 1992) (prepetition claims are presumed to be prima facie valid and the presumption may be overcome by the objecting party only it if offers evidence of equally probative value in rebuttal). 22. At this time HK cannot provide the specific factual and legal bases upon which it

will rely in opposing the Objection because the Objection fails to provide any bases upon which it was filed. HK will supplement this response if and when any basis is provided by the Debtors.

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WHEREFORE, HK respectfully requests that this Court deny the Objection and deem the claim of HK valid and allowed. Respectfully submitted; JAFFE, RAITT, HEUER & WEISS, P.C. /s/ Paige E. Barr By: Richard K. Kruger (P57142) Paige E. Barr (Ill. Bar No. 6282474) Jaffe, Raitt, Heuer & Weiss P.C. 27777 Franklin Road, Suite 2500 Southfield, Michigan 48034 (248) 351-3000 (248) 351-3082 (Facsimile) rkruger@jaffelaw.com pbarr@jaffelaw.com Attorneys for HK Dated: July 21, 2008

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