UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION ) Chapter 11 ) Case No.

05-55927 (SWR) COLLINS & AIKMAN CORPORATION, et al., ) ) Jointly Administered ) Debtors. ) Honorable Stephen W. Rhodes ______________________________________________________________________________ LIMITED OBJECTION OF JPMORGAN CHASE BANK, N.A., AS PRE-PETITION AGENT, TO DEBTORS MOTIONS TO APPROVE AGREEMENTS FOR PRICE RELIEF AND OTHER RELATED BENEFITS JPMorgan Chase Bank, N.A., as administrative agent for the pre-petition senior secured lenders (the Pre-Petition Agent), by its counsel, Wachtell, Lipton, Rosen & Katz and Dykema Gossett PLLC, hereby files this limited objection (the Objection) to the Debtors motions to approve agreements with certain of its customers providing for price relief and other related benefits (the Motions)1, as follows: 1. Under the Final DIP Order entered by this Court on July 28, 2005, the In re:

stipulated principal amount of the bank debt owing to the pre-petition secured lenders (the PrePetition Secured Lenders) is approximately $748 million. That senior indebtedness is secured by liens and security interests held by the Agent on substantially all of the pre-petition assets of the Debtors estates (excluding a portion of the stock of certain foreign subsidiaries). As such,
The Motions are: Debtors Motion for Order Authorizing Entry into Agreement with Honda of America Manufacturing Inc. Providing for Immediate Price Relief and Other Related Benefits [Filed: 09/23/05] (Docket No. 1242); Debtors Motion for Order Authorizing Entry into Agreement with Nissan North America Inc. Providing for Immediate Price Relief and Other Related Benefits [Filed: 09/29/05] (Docket No. 1328); Debtors Motion for Order Authorizing Entry into Agreement with DaimlerChrysler Corporation Providing for Immediate Price Relief and Other Related Benefits [Filed: 09/29/05] (Docket No. 1331); Debtors Motion for Order Authorizing Entry into Agreement with General Motors Corporation Providing for Immediate Price Relief and Other Related Benefits [Filed: 09/30/05] (Docket No. 1347); Debtors Motion for Order Authorizing Entry into Agreement with Ford Motor Company Providing for Immediate Price Relief and Other Related Benefits [Filed: 10/05/05] (Docket No. 1367); and Debtors Motion for Order Authorizing Entry into Agreement with Toyota Motor Manufacturing North America Inc. Providing for Immediate Price Relief and Other Related Benefits [Filed: 09/23/05] (Docket No. 1246).
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the Pre-Petition Secured Lenders are the predominant creditor constituency in these chapter 11 cases. 2. The Pre-Petition Agents legal and financial advisors have had an

opportunity to review the term sheets (the Term Sheets) entered into by the Debtors and their principal original equipment manufacturer customers (the OEMs), for which approval is sought in the Motions. While the Pre-Petition Agent believes that the Debtors have made significant progress in their negotiations with the OEMs, there remains a looming and significant liquidity concern that the Court should require the Debtors and the OEMs to address through modification of the Term Sheets, as a condition to the Courts approval. 3. Under Section 2.02 of the Customer Agreement dated as of July 8, 2005,

as approved by the Court, the OEMs agreed that the Customers respective payment terms will be instant net (net 5 days) or equivalent terms. In their current form, the Term Sheets fail to provide for the continuation of these critical payment terms beyond March 31, 2006 (and in some cases earlier). As such, absent modification of the Term Sheets, not later than March 31, 2006, the Debtors potentially face an increase in their working capital requirements in an amount estimated by the Pre-Petition Agents financial advisor to be between $150 to $175 million. It is readily apparent that the Debtors lack any source to fund such a massive increase in working capital. As a condition to approval of the Term Sheets, this Court should require the OEMs and the Debtors to avert a potential liquidity crisis by agreeing that the critical net 5 day payment terms be continued through the conclusion of the Debtors chapter 11 cases. 4. In addition, the Pre-Petition Agent notes that under the Protocol for

Customer Funding of Capital Expenditure, Launch and Tooling Costs (the Protocol) between -2DET01\480772.1 ID\BGB

the Debtors and the OEMs which was entered into in connection with the final order authorizing the Customer Agreement and was intended to provide a procedure for the Debtors to request, and for the OEMs to fund, capital expenditures, tooling costs and launch costs the Debtors are having difficulty obtaining payments on purchase orders for in-house tooling work performed by the Debtors for the benefit of the OEMs. The Debtors inability to obtain timely payments for in-house tooling is having a significant negative impact on the Debtors liquidity. The Debtors have informed the Pre-Petition Agent that they are attempting to negotiate an addendum to the Protocol to address the prompt collection of in-house tooling payments from the OEMs. The Court should require the Debtors and the OEMs to reach a satisfactory addendum to the Protocol as a condition to approval of the Motions. 5. Finally, absent the agreement of the Pre-Petition Agent, the Debtors and

the OEMs do not have the ability to agree to any terms that interfere with the liens and security interests held by the Pre-Petition Agent for the benefit of the Pre-Petition Secured Lenders. The Pre-Petition Agent reserves all of its rights to object specifically in a confidential forum to the approval of any Term Sheets that purport to grant impermissible rights that interfere with the Pre-Petition Agents liens and collateral security interests. WHEREFORE, the Pre-Petition Agent respectfully requests that the Court condition the approval of the Motions upon the modification of the agreements reached between the Debtors and the OEMs (i) to require the OEMs to continue to adhere to the previously agreed payment terms for component parts of net instant (net 5 days) or equivalent terms throughout the duration of these chapter 11 cases, and (ii) to resolve the liquidity problems associated with the collection of in-house tooling payment orders under the Protocol.

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Respectfully submitted, DYKEMA GOSSETT PLLC

By: /s/ Brendan G. Best_____________ Ronald L. Rose (P19621) Brendan G. Best (P66370) 400 Renaissance Center Detroit, MI 48243 (313) 568-6553 and Harold S. Novikoff David C. Bryan WACHTELL, LIPTON, ROSEN & KATZ 51 West 52nd Street New York, New York 10019 (212) 403-1000 Attorneys for JPMorgan Chase Bank, N.A., as PrePetition Agent Dated: October 6, 2005

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