IN THE UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION ----------------------------------------------------------x In re: : : 1 COLLINS & AIKMAN

CORPORATION, et al. : : Debtors. : : : : ----------------------------------------------------------x Chapter 11 Case No. 05-55927 (SWR) (Jointly Administered) (Tax Identification #13-3489233) Honorable Steven W. Rhodes

FIRST APPLICATION OF MCDONALD HOPKINS CO., LPA AS SPECIAL COUNSEL TO DEBTORS FOR ALLOWANCE OF COMPENSATION FOR SERVICES RENDERED AND REIMBURSEMENT OF EXPENSES FOR THE PERIOD FROM MAY 17, 2005 THROUGH SEPTEMBER 30, 2005 Name of Applicant: Authorized to Provide Professional Services to: Date of Retention: Period for which compensation and reimbursement is sought: Amount of Compensation sought as actual, reasonable and necessary: Amount of Expense Reimbursement sought as actual, reasonable and necessary: McDonald Hopkins Co., LPA Collins & Aikman Corporation1 May 17, 2005 May 17, 2005 through September 30, 2005 $254,775.00

$66,451.12

The Debtors in the jointly administered cases include: Collins & Aikman Corporation; Amco Convertible Fabrics, Inc.; Becker Group, LLC (d/b/a Collins & Aikman Premier Mold); Brut Plastics, Inc.; Collins & Aikman (Gibraltar) Limited; Collins & Aikman Accessory Mats, Inc. (f/k/a the Akro Corporation); Collins & Aikman Asset Services, Inc.; Collins & Aikman Automotive (Argentina), Inc. (f/k/a Textron Automotive (Argentina), Inc.); Collins & Aikman Automotive (Asia), Inc. (f/k/a Textron Automotive (Asia), Inc.); Collins & Aikman Automotive Exteriors, Inc. (f/k/a Textron Automotive Exteriors, Inc.); Collins & Aikman Automotive Interiors, Inc. (f/k/a Textron Automotive Interiors, Inc.); Collins & Aikman Automotive International, Inc.; Collins & Aikman Automotive International Services, Inc. (f/k/a Textron Automotive International Services, Inc.); Collins & Aikman Automotive Mats, LLC; Collins & Aikman Automotive Overseas Investment, Inc. (f/k/a Textron Automotive Overseas Investment, Inc.); Collins & Aikman Automotive Services, LLC; Collins & Aikman Canada Domestic Holding Company; Collins & Aikman Carpet & Acoustics (MI), Inc.; Collins & Aikman Carpet & Acoustics (TN), Inc.; Collins & Aikman Development Company; Collins & Aikman Europe, Inc.; Collins & Aikman Fabrics, Inc. (d/b/a Joan Automotive Industries, Inc.); Collins & Aikman Intellimold, Inc. (d/b/a M&C Advanced Processes, Inc.); Collins & Aikman Interiors, Inc.; Collins & Aikman International Corporation; Collins & Aikman Plastics, Inc.; Collins & Aikman Products Co., Collins & Aikman Properties, Inc.; Comet Acoustics, Inc.; CW Management Corporation; Dura Convertible Systems, Inc,; Gamble Development Company; JPS Automotive, Inc. (d/b/a PACJ, Inc); New Baltimore Holdings, LLC, Owosso Thermal Forming, LLC; Southwest Laminates, Inc. (d/b/a Southwest Fabric Laminators Inc.); Wickes Asset Management, Inc., and Wickes Manufacturing Company.
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INTRODUCTION McDonald Hopkins Co., LPA (McDonald Hopkins), special counsel for the abovecaptioned debtors and debtors in possession (collectively, the Debtors), hereby makes this Application pursuant to sections 330 and 331 of the Bankruptcy Code, 11 U.S.C. 101-1330 (the Bankruptcy Code), Rule 2016 of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules), the Local Bankruptcy Rules of the Eastern District of Michigan, Southern Division (the Local Rules), for an order awarding interim compensation for professional services rendered in the amount of $254,775.00 for fees and $66,451.12 for expenses for the period of May 17, 2005, through September 30, 2005 (the First Compensation Period). In support of this Application, McDonald Hopkins states as follows: BACKGROUND 1. On May 17, 2005 (the Petition Date), the Debtors filed their voluntary petitions

for relief under chapter 11 of 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. No trustee or examiner has been appointed in these cases. On the Petition Date, the Court entered an order jointly administering these cases pursuant to Bankruptcy Rule 1015(b). 2. The Debtors and their non-debtor affiliates are leading global suppliers of

automotive components, systems and modules to all of the worlds largest vehicle manufacturers, including DaimlerChrysler AG, Ford Motor Company, General Motors Corporation, Honda Motor Company, Inc., Nissan Motor Company Unlimited, Porsche Cars GB, Renault Crateur D Automobiles, Toyota SA and Volkswagen AG. JURISDICTION 3. The Court has jurisdiction over this Application pursuant to 28 U.S.C. 157 and

1334. Consideration of the Application is a core proceeding within the meaning of 28 U.S.C.
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157(b)(2). Venue of the Debtors cases and this Application in the Eastern District of Michigan is proper under 28 U.S.C. 1408 and 1409. The statutory bases for the relief requested herein are sections 156(c), 327(e), and 328 of the Bankruptcy Code and Rule 2014(a) of the Bankruptcy Rules. THE DEBTORS RETENTION OF MCDONALD HOPKINS 4. By Application dated June 1, 2005, Docket No. 196, the Debtors requested

authority to employ and retain McDonald Hopkins as their special counsel, pursuant to sections 327(e) and 328(a) of the Bankruptcy Code and Rules 2014, 2016 and 5002 of the Bankruptcy Rules, for the purpose of rendering legal services to the Debtors as requested by the Debtors, including, but not limited to: (a) representing the Debtors as their primary labor and employment counsel and serving as counsel on matters relating to labor neutrality agreements; (b) serving as the Debtors primary counsel with respect to real estate, executive contracts, and commercial contracts; (c) representing the Debtors in litigation matters, including ongoing commercial and intellectual property litigation; (d) serving as national coordinating counsel for certain of the Debtors' litigation, including asbestos cases; and (e) serving as one of the Debtors' counsel on corporate transactions. On June 9, 2005, the Court entered the order authorizing the Debtors to retain and employ McDonald Hopkins as special counsel for the Debtors, Docket No. 288, a copy of which is attached hereto as Exhibit A (the Retention Order). 5. Pursuant to the procedures set forth in the Administrative Order Establishing

Procedures for Monthly Compensation and Reimbursement of Expenses for Professionals and Official Committee Members, Docket No. 144, entered May 25, 2005 (the Compensation Order), professionals may request monthly compensation for fees and reimbursement of expenses, and interested parties may object to such requests. If no interested party objects to a professionals request within 15 days, the applicable professional may submit to the Court a 2
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certification of no objection and, thereafter, the Debtors is authorized to pay such professional 80% of the fees and 100% of the expenses requested in the fee application. If an objection is timely filed, the Compensation Order allows the Debtors to pay 80% of the fees and 100% of the expenses not subject to the objection. COMPENSATION PAID AND ITS SOURCE 6. Consistent with the Compensation Order, McDonald Hopkins has billed the

Debtors $211,734.50 for fees and $10,689.96 for expenses and has received payment of $104,031.20 for fees and $7,133.67 for expenses during the First Compensation Period as follows:

Amounts Paid
Period 05/17/05-06/30/05 07/01/05-07/31/05 08/01/05-08/31/05 TOTALS Date of Invoice 7/18/05 8/10/05 9/12/05 Incurred Amounts Fees Expenses $86,745.50 $4,956.50 $44,955.50 $2,177.11 $80,033.50 $3,556.35 $211,734.50 $10,689.96 Fees Expenses $68,066.80 $4,956.56 $35,964.40 $2,177.11 $0.00 $0.00 $104,031.20 $7,133.67

These payments have been applied to McDonald Hopkins fees and expenses in accordance with the Compensation Order. 7. Prior to filing their petitions, the Debtors did not pay McDonald Hopkins a

retainer. McDonald Hopkins has not shared any compensation with any other entity and no agreement to share compensation exists between McDonald Hopkins and any other entity 8. All services for which McDonald Hopkins requests compensation were performed

for or on behalf of the Debtors. THE APPLICATION 9. In accordance with sections 330(a) and 331 of the Bankruptcy Code and Rule

2016 of the Bankruptcy Rules, as well as the Local Rules, and the United States Trustee Guidelines for Reviewing Applications for Compensation and Reimbursement of Expenses, 3
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issued on January 30, 1996 (the Trustees Guidelines), McDonald Hopkins requests that the Court authorize an allowance of interim compensation for professional services rendered by McDonald Hopkins in the amount of $254,775.00 and the reimbursement of the actual and necessary expenses incurred by McDonald Hopkins in the amount of $66,451.12 during the First Compensation Period. If the Court grants the relief requested in this Application, the blended hourly billing rate for all McDonald Hopkins professionals rendering services to the Debtors during the First Compensation Period would be approximately $232. A. Compensation 10. During the First Compensation Period, McDonald Hopkins provided a total of

1,098.80 hours of services to the Debtors. A summary schedule of the hours devoted by each McDonald Hopkins professional, the hourly rate of each professional and the total dollar amount charged is attached hereto as Exhibit B. 11. Each professional providing services to the Debtors maintains daily time entries,

which are prepared contemporaneously with the rendition of services to the Debtors. These time records set forth the dates on which services were rendered, a summary description of such services and the time spent each day delivering such services. A schedule of such services is attached to this Application as Exhibit C. In addition, consistent with Rule 2016-1(b)(11) of the Local Rules, a brief biographical statement of each professional and paraprofessional rendering services to the Debtors is attached as hereto as Exhibit D. 12. In addition, in accordance with the Guidelines, McDonald Hopkins has itemized

its services by major project area. The summary of the services provided divided by major project area is attached hereto as Exhibit E. 13. Set forth below is a summary description of McDonald Hopkins principal

activities during the First Compensation Period: 4

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(a) 14.

Asbestos Case Management 196.30 Hours; $20,399.50 Fees

During the Compensation Period, McDonald Hopkins assisted the Debtors in the

preparation and filing of notices of pendency in various prepetition and postpetition asbestos cases (collectively the Asbestos Notices of Pendency). McDonald Hopkins communicated with local counsel and excess insurance carriers regarding filing of the Asbestos Notices of Pendency. McDonald Hopkins also worked with local counsel in the asbestos cases to assure that such counsel were retained, that the matters for which they were retained were properly managed and that such counsel were paid consistent with orders of the Court. 15. In addition, McDonald Hopkins continued to forward to the Debtors insurance

reimbursement checks and invoices of local counsel representing the Debtors in certain asbestos cases. McDonald Hopkins also continued to maintain an insurance recovery spreadsheet of relevant reimbursement information. (b) 16. General Case Administration 14.50 Hours; $1,869.50 Fees

McDonald Hopkins case management services included preparing updates on

critical dates in accordance with various courts docket calendars (e.g., hearing dates and response deadlines); docketing pleadings and other documents in the Debtors cases; and maintaining service lists for service of pleadings. (c) 17. General Litigation 117.50 Hours; $24,460.00 Fees

In the General Litigation category, McDonald Hopkins prepared and filed on

behalf of the Debtors notices of pendency in numerous prepetition and postpetition litigation cases. McDonald Hopkins addressed litigation issues, including, but not limited to, intellectual property issues in Melea, asbestos litigation in Bonny Forge, ongoing indemnity obligations to Textron and Kayser Roth, continued litigation against co-defendants in Arvinmeritor and Sidaway, and environmental insurance recovery matters. 5
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McDonald Hopkins also

communicated frequently with the Debtors and the Debtors bankruptcy counsel to provide historical information on Debtors litigation cases, and counsel for opposing parties and outside counsel regarding all pending litigation matters and procedures and case management going forward. 18. McDonald Hopkins continued to represent the Debtors in several prepetition

litigation matters not subject to the bankruptcy stay, including the Commercial Union matter and several Canadian cases. (d) 19. General Real Estate 81.50 Hours; $23,273.00 Fees

McDonald Hopkins assisted the Debtors with the proposed purchase of certain

real estate, including the Delta Township, Michigan, property. McDonald Hopkins reviewed and negotiated the applicable purchase agreements and related documents related to the proposed sale of real estate. McDonald Hopkins also addressed issues relating to the Ingersoll mechanics lien. 20. Additionally, McDonald Hopkins negotiated and prepared waivers regarding the

Hermosillo construction agency agreement and assisted the Debtors with new funding requests pertaining to the Hermosillo, Mexico, facility. Moreover, McDonald Hopkins assisted the

Debtors in reviewing and negotiating leases of property in Newark and Troy (both in Michigan) and an agreement with CBRE. (e) 21. Intellectual Property 39.40 Hours; $6,280.00 Fees

On behalf of the Debtors, McDonald Hopkins handled matters relating to the

Debtors patent annuity payments, and assisted in the transfer of patent files from other counsel to McDonald Hopkins. In addition, McDonald Hopkins addressed numerous other issues

relating to Debtors intellectual property, including, but not limited to: (i) the stay of the Melea

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Limited patent infringement case; (ii) the purported patent infringement claim of BWM; and (iii) United Kingdom patents. (f) 22. Labor and Employment 567.20 Hours; $160,912.00 Fees

During the First Compensation Period, McDonald, Hopkins devoted a substantial

amount of time assisting the Debtors regarding a union organizing drive in Americus, Georgia, including various hearings relating to the appropriateness of union conduct in the election process and various results from this conduct. This conduct included claims of inappropriate racial overtones by union organizers. McDonald Hopkins prepared for the hearings, drafted the post-hearing brief, and appeal documents. 23. McDonald Hopkins also handled a number of other matters for the Debtors,

including preparing multiple executive employments agreements, negotiating the potential lifting of the automatic stay in the Patterson 302 litigation, and defending the Debtors in a case involving termination of a certain employee. 24. In addition, McDonald, Hopkins assisted the Debtors with multiple legal matters

relating to workers' compensation claims, severance claims, military leave, lunch pay and other grievance and labor arbitration matters, and other substantial legal questions related to labor relations and union organizing. McDonald, Hopkins also assisted the Debtors in drafting flyers for the Debtors to distribute to their employees regarding the chapter 11 filing. (g) 25. Preparation of Retention and Fee Applications 38.90 Hours; $6,975.50 Fees

McDonald Hopkins prepared its application for retention as special counsel to the

Debtors, which included an extensive conflict check of parties in interest. (h) 26. Travel 43.50 Hours; $10,605.00 Fees

McDonald Hopkins incurred 43.50 hours traveling to and from client and

hearings. All such time has been reduced to 50% of the actual time spent. 7
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B.

Actual and Necessary Expenses, Disbursement and Support Charges Incurred 27. McDonald Hopkins seeks reimbursement for actual expenses (Expenses)

incurred in the rendition of services during the First Compensation Period in the sum of $66,451.12. McDonald Hopkins submits that such Expenses were reasonable and necessary in light of the services provided. 28. McDonald Hopkins utilized the following procedures with respect to the

Expenses incurred in rendering services during the First Compensation Period: a) No amortization of the cost of any investment, equipment or capital outlay is included in the Expenses, and McDonald Hopkins does not make a profit on any Expense. In addition, for those items or services that McDonald Hopkins justifiably purchased or contracted for from a third party (such as outside copy services), McDonald Hopkins seeks reimbursement only for the exact amount billed to McDonald Hopkins by the third party vendor and paid by McDonald Hopkins to the third party vendor. McDonald Hopkins has retained documentation for all Expenses in excess of $25 and has provided such documentation as part of Exhibit F. Photocopying by McDonald Hopkins was charged at $.20 per page. To the extent practicable, McDonald Hopkins utilized less expensive, outside copying services. Telecopying by McDonald Hopkins was charged only for outgoing faxes at $.50 per page. McDonald Hopkins used overnight delivery and third party messenger services only as necessary. Computer assisted legal research was used only when time pressures rendered it impracticable to conduct such research manually or where the attorney performing such research determined that computer assisted legal research would be more cost efficient than manual research. RELEVANT STANDING A. Compensation. 29. To grant a request for compensation pursuant to section 330 of the Bankruptcy

b) c)

d) e)

Code, a court must find that such request is reasonable. The reasonableness of a compensation request is determined by the lodestar method: 8
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The Supreme Court has made it clear that the lodestar method of fee calculation is the method by which federal courts should determine reasonable attorney's fees under federal statutes that provide for such fees. Boddy v. United States Bankruptcy Court (In re Boddy), 950 F.2d 334, 337 (6th Cir. 1991); see also In re White Motor Credit Corp., 50 B.R. 885, 890 (Bankr. N.D. Ohio 1985). The lodestar amount is calculated by multiplying the number of hours reasonably expended by the reasonable hourly rate of a professional. White Motor, 50 B.R. at 890. There is a strong presumption that the lodestar product is reasonable under section 330 of the Bankruptcy Code. See Pennsylvania v. Delaware Valley Citizens' Council for Clean Air, 478 U.S. 546, 565 (1986); In re Drexel Burnham Lambert Group, Inc., 133 B.R. 13, 22 (Bankr. S.D.N.Y. 1991). 30. McDonald Hopkins fees are not unusual and are commensurate with fees that

other lawyers of comparable experience and expertise charge on a regular basis in chapter 11 cases. McDonald Hopkins lodestar calculation is based upon hourly rates that are well within the range of rates that are charged by comparable firms in other bankruptcy cases. Accordingly, McDonald Hopkins lodestar calculation is reasonable under section 330 of the Bankruptcy Code. See Drexel Burnham Lambert, 33 B.R. at 22. B. Expenses. 31. Sections 330(a)(2) and 503(b)(4) of the Bankruptcy Code permit reimbursement See White Motor, 50 B.R. at 891-92. As noted above,

for actual, necessary expenses.

McDonald Hopkins has already conducted a review process and has eliminated the Expenses that it deemed duplicative. Accordingly, those Expenses for which reimbursement is sought in this Application satisfy the standards presented by section 330(a)(2) of the Bankruptcy Code and the Guidelines.

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ADJUSTMENTS 32. McDonald Hopkins reduced its request by $10,605.00. This reduction is a result

of an adjustment to 50% for travel time (as discussed above). CONCLUSION 33. For all of the foregoing reasons, McDonald Hopkins believes that the fees

requested in this Application are reasonable and reflect the value of the services provided to the Debtors estates. Moreover, McDonald Hopkins has requested reimbursement only of actual and necessary expenses. In accordance with the Guidelines, Shawn M. Riley has certified that McDonald Hopkins billing practices for the Debtors and this Application conforms with the Guidelines. Such certification is attached to this Application as Exhibit G. WHEREFORE, McDonald Hopkins respectfully requests that the Court enter an order (a) granting McDonald Hopkins an interim allowance of compensation in the amount of $254,775.00 for services rendered to the Debtors in connection with the Debtors chapter 11 cases during the First Compensation Period; (b) approving the reimbursement of expenses incurred in the representation of the Debtors during the First Compensation Period in the amount of $66,451.12; (c) authorizing the Debtors to pay McDonald Hopkins the fees and reimbursable expenses authorized by the Court attributable to the First Compensation Period, net of payments

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already made by the Debtors, but without any further holdback; and (d) granting such other and further relief as the Court may deem proper. October 13, 2005 Respectfully submitted, /s/Michael J. Kaczka Shawn M. Riley (0037235) Michael J. Kaczka (0076548) McDONALD HOPKINS CO., LPA 600 Superior Avenue, E. Suite 2100 Cleveland, OH 44114 Telephone: 216.348.5400 Facsimile: 216.348.5474 E-mail: sriley@mcdonaldhopkins.com mkaczka@mcdonaldhopkins.com SPECIAL COUNSEL FOR DEBTORS AND DEBTORS IN POSSESSION

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