UNITED STATES BANKRUPTCY COURT FOR THE EASTERN DISTRICT OF MICHIGAN

KOTZ, SANGSTER, WYSOCKI & BERG, P.C. ATTORNEYS AND COUNSELORS AT LAW, 400 RENAISSANCE CENTER, SUITE 2555, DETROIT, MICHIGAN 48243-1675

In Re: Collins & Aikman Corporation et al. Debtors

Case No. 05-55927 (SWR)

Chapter 11 Hon. Steven W. Rhodes

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D & FS MOTION FOR RELIEF FROM THE AUTOMATIC STAY OR, IN THE ALTERNATIVE, FOR A GRANT OF ADEQUATE PROTECTION FOR THE DEBTORS CONTINUED USE OF PROPERTY PURSUANT TO 11 U.S.C. 363 (e)

D & F Corporation, a Michigan Corporation (D & F), by and through its attorneys, Kotz, Sangster, Wysocki & Berg, P.C., hereby files its Motion for Relief from the Automatic Stay, or in the Alternative, for an Order Granting Adequate Protection (the Motion), and states as follows: 1. On May 17, 2005, the Debtors filed their Voluntary Petition for Relief under Chapter 11

of the United States Bankruptcy Code (the Code). 2. The Court has jurisdiction over this matter pursuant to 28 U.S.C. 1334 and this matter

is a core proceeding within the meaning of 28 U.S.C. 157(b)(2). 3. 4. Venue is proper pursuant to 28 U.S.C. 1408 and 1409. Prior to the Debtors bankruptcy filing and pursuant to a contract with Debtors, D & F

fabricated and delivered certain tooling fixtures (Fixtures) for use in the manufacture, assembly, or fabrication of plastic parts related to Debtors automotive supply business. A summary of the

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delivered fixtures is attached hereto as Exhibit A. 1 Copies of the Purchase Orders and Invoices for the Fixtures are attached as Exhibit B.
KOTZ, SANGSTER, WYSOCKI & BERG, P.C. ATTORNEYS AND COUNSELORS AT LAW, 400 RENAISSANCE CENTER, SUITE 2555, DETROIT, MICHIGAN 48243-1675

5. 6.

Upon information and belief, the Debtors continue to use the Fixtures. The Fixtures are used in the automotive industry for the purpose of producing specific

plastic parts or components that are, in most cases, uniquely designed for use in specific vehicle programs. Once a vehicle program is discontinued, or sufficient parts have been produced, the mold become obsolete and it has little more than its scrap value. 7. Continued use of the Fixtures and continued production of these parts by Debtors

substantially decreases and impairs the Fixtures value because the value of the Fixtures lies almost exclusively in the Fixtures ability to produce specific automotive parts for Debtors customers. Other than to provide the project number on its purchase orders, the Debtors have not informed D & F of the programs for which the Fixtures are used. 8. Upon information and belief, D & F believes that at least some of the programs for

which the Fixtures are being used are nearing conclusion. Once the Debtors have produced sufficient parts or the relevant program is concluded, the Fixtures will lose almost all of their value. 9. In addition, continued use of the fixtures may result in substantial damage to the

Fixtures, thus reducing or eliminating their value. D & F has no information that the Debtors are properly maintaining and insuring the molds. As of the date hereof, the Debtors owe D & F an aggregate amount of $175,999.00 for the Fixtures identified on Exhibit A plus any accruing interest, costs, and fees allowed under the terms of the invoices.

There are additional fixtures and additional amounts due by Debtors to D & F for fixtures not listed on Exhibit A. Exhibit A reflects only those fixtures and amounts which moldbuilder liens are being claimed and on which financing statements have been filed.

10.

Michigans Ownership Rights in Die Molds and Forms Act (Moldbuilders Lien Act),

MCL 445.611 et seq., provides a moldbuilder with lien on the dies, molds or forms for the amount
KOTZ, SANGSTER, WYSOCKI & BERG, P.C. ATTORNEYS AND COUNSELORS AT LAW, 400 RENAISSANCE CENTER, SUITE 2555, DETROIT, MICHIGAN 48243-1675

that a customer or molder owes the moldbuilder for the fabrication, repair, or modification of the die, mold or form See MCL 445.619(3). 11. 12. D & F is a Moldbuilder within the meaning of the Moldbuilders Lien Act. Pursuant to the requirements of the Moldbuilders Lien Act, D & F permanently

recorded its name, street address, city, and state as required by MCL 445.619(1) on each Fixture referred to in Exhibits A and B. 13. In accordance with MCL 445.619(2), D & F filed the appropriate financing statement

regarding the Fixtures listed on Exhibits A and B. The financing statements are attached as Exhibit C. 14. D & F has properly perfected first-priority liens on the Fixtures pursuant to MCL

445.619. See UCC financing statements attached as Exhibit C. 15. D & F has an interest in the Fixtures in the nature of a statutory lien pursuant to the

Moldbuilders Lien Act. 16. On May 26, 2005, this Court entered its Amended Order, (A) Authorizing the Debtors

to Pay in the Ordinary Course of Business Pre-Petition Claims of Shippers and Other Lien Claimants, and (B) Authorizing Financial Institutions to Pay all Checks and Electronic Payment Requests Made by the Debtors Relating to the Foregoing. A copy of the Order is attached hereto as Exhibit D (Order). 17. Under the terms of the Order, the Debtor is authorized to pay Lien Claimant Claims in

an amount up to $13,500,000 provided that the Lien Party has perfected or is capable of perfecting a

lien on the Debtors assets, and subject to the Debtors right to challenge the validity or extent of the lien. See Exhibit D, 4.
KOTZ, SANGSTER, WYSOCKI & BERG, P.C. ATTORNEYS AND COUNSELORS AT LAW, 400 RENAISSANCE CENTER, SUITE 2555, DETROIT, MICHIGAN 48243-1675

18.

Additionally, the Debtors have authority to make such payments only if they have

received payment from a customer for the liened assets. See Exhibit D. 19. Despite the Courts Order, D & F has not received any payment for any of the Fixtures

since the date the Order was entered, nor has the Debtor offered any adequate protection of D & Fs interest in the Fixtures. 20. Fixtures. 21. 11 U.S.C. 363(e) provides that, notwithstanding any other provision of Section 363, D & F does not have, and has not been offered, adequate protection of its interest in the

the Court may on request of an entity that has an interest in property used . . . by the Trustee, the Court, with or without a hearing, shall prohibit or condition such use . . . as necessary to provide adequate protection of such interest. 22. 11 U.S.C. 362(d) provides that the Court shall grant relief from the stay for cause,

including lack of adequate protection of an interest in property of such party in interest. 23. D & Fs collateral continues to decrease in value, and the collateral is at risk of losing

all of its value. However, the Debtors have made no effort to provide any form of adequate protection. 24. The denial of adequate protection due to the failure of Debtors to make their required

payments for the Fixtures, insuring against continued depreciation, along with the continued decrease in the value of the collateral, constitutes cause within the meaning of 362(d) of the Code entitling D & F to relief from the automatic stay.

25.

The Debtors continued use of D & Fs property without rendering payment to D & F

constitutes cause for relief from the automatic stay under 362(d)(1) of the Code, and consequently,
KOTZ, SANGSTER, WYSOCKI & BERG, P.C. ATTORNEYS AND COUNSELORS AT LAW, 400 RENAISSANCE CENTER, SUITE 2555, DETROIT, MICHIGAN 48243-1675

D & F is entitled to periodic cash payments or a replacement lien to assure the value of its collateral is not depleted by use during the bankruptcy, pursuant to 11 U.S.C. 361. 26. D & F also requests that relief from the automatic stay be effective immediately upon

entry of the Order granting this Motion, thereby avoiding Federal Rule of Bankruptcy Procedure 4001(a)(3). WHEREFORE, D & F Corporation requests this Court to enter the form of Order attached hereto as Exhibit E and award D & F Corporation its costs, attorney fees, and any other relief that this Court deems just and appropriate. Dated: April 6, 2006 Respectfully Submitted, Kotz, Sangster, Wysocki & Berg, P.C.

/s/ Frederick A. Berg Frederick A. Berg (P38002) Rebecca M. Decoster (P62013) Attorneys for D&F Corporation 400 Renaissance Center, Suite 2555 Detroit, MI 48243 Telephone: (313) 259-8300

S:\D & F Corporation\Collins & Aikman\pleadings\Motion for Relief from Stay.doc

UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION

KOTZ, SANGSTER, WYSOCKI & BERG, P.C. ATTORNEYS AND COUNSELORS AT LAW, 400 RENAISSANCE CENTER, SUITE 2555, DETROIT, MICHIGAN 48243-1675

In re: COLLINS & AIKMAN CORPORATION, et al., Chapter 11 Case No. 05-55927 (Jointly Administered) Hon. Steven W. Rhodes

Debtor. /

BRIEF IN SUPPORT OF D & F CORPORATIONS MOTION FOR RELIEF FROM THE AUTOMATIC STAY OR IN THE ALTERNATIVE GRANT ADEQUATE PROTECTION FOR THE DEBTORS CONTINUED USE OF PROPERTY PURSUANT TO 11 USC 363(e)

D & F Corporation (D & F), by its attorneys, Kotz, Sangster, Wysocki & Berg, P.C. submits its Brief in Support of D & F Corporations Motion for Relief from the Automatic Stay or in the Alternative Grant Adequate Protection (the Motion), and states as follows: INTRODUCTION D & F has a valid lien on certain molds fixtures (Fixtures) used by the Debtors to produce specialized parts related to Debtors automotive supply business. D & F fabricated and delivered the Fixtures to Debtors location for their use. Prior to delivery, D & F permanently affixed its name, street address, city, and state to each Fixture. In addition, D & F properly filed financing statements with the State of Michigan. MCL 445.619. D & Fs lien became properly perfected by permanently affixing its name, street address, city, and state on each Fixture along with the filing of a financing statement(s) under Michigans Ownership Rights in Die Molds and Forms Act (Moldbuilders Lien Act). MCL 445.619. Moreover, as indicated in exhibits A and C, D&F properly filed UCC-1 financing statements regarding these molds.

ARGUMENT The Debtors continue to use the Fixtures without offering to compensate D&F for their
KOTZ, SANGSTER, WYSOCKI & BERG, P.C. ATTORNEYS AND COUNSELORS AT LAW, 400 RENAISSANCE CENTER, SUITE 2555, DETROIT, MICHIGAN 48243-1675

use. The Debtors continued use of the Fixtures results in a depreciation of their value, and the possibility that the useful life of the Fixtures will expire before payment is made, reducing their value to zero. In such cases, the bankruptcy code permits the court to order that adequate protection be afforded the secured creditor. 11 USC 363(e) states in relevant part as follows: Notwithstanding any other provision of this section, at any time, on request of entity that has an interest in property usedby the trustee, the court, with or without a hearing, shall prohibit or condition such useas is necessary to provide adequate protection of such interest. Here, the Debtor is making use of the Fixtures, and D&F has a continuing interest in that property by virtue of its liens. Thus, the only issue is what measures may be necessary to provide adequate protection of that interest, and if such measures are not provided, whether the automatic stay should be lifted to permit the foreclosure of the moldbuilders lien. Under 11 USC 361, the court may order that periodic payments be made to prevent the loss of value arising from the use of the property. The Fixtures have a limited life span, because they are utilized for a particular make and model of vehicle that will not always be made. Moreover, the funding for payment of the Fixtures comes from payment by the Debtors customers, which the Debtor may or may not allocate to payment of vendors. A lien on those customer accounts receivable may provide a satisfactory solution. If such protection is not forthcoming, the automatic stay should be terminated. The filing of a bankruptcy petition initiates an automatic stay that prevents creditors from taking any action to enforce its contract rights, collection any debts or claims against a debtor. 11 U.S.C. 362(a).

The automatic stay continues to operate until the case is dismissed, closed, discharged, or until the property is no longer part of the estate. 11 U.S.C. 362(c).
KOTZ, SANGSTER, WYSOCKI & BERG, P.C. ATTORNEYS AND COUNSELORS AT LAW, 400 RENAISSANCE CENTER, SUITE 2555, DETROIT, MICHIGAN 48243-1675

A party seeking Relief from the Stay under 362(d)(1) must establish a prima facie case for such Relief. In re Heinzeroth, 40 B.R. 518, 520 (Bankr. E.D. Pa. 1984). This requires that the creditor present some evidence of cause to the Court so that the burden of proof can be shifted to the debtor pursuant to 11 U.S.C. 362(g). Sumitomo Trust & Banking Co., Ltd., Los Angles Agency, v. Hollys Inc. (In re Matter of Hollys, Inc.), 140 B.R. 643, 683 (Bankr. W.D. Mich. 1992). Cause under 362(d)(1) is a broad and flexible concept which permits a bankruptcy court, as a court of equity, to respond to inherently fact-sensitive situations. In re Indian River Estates, Inc., 293 B.R. 429, 433 (Bankr. N.D. Ohio 2003) (citing In re Texas State Optical, Inc., 188 B.R. 522, 556 (Bankr. E.D. Tex 1995)). Similarly, the Sixth Circuit held that courts must determine whether discretionary relief is appropriate on a case-by-case basis. In re Trident, 52 F.3d 127, 131 (6th Cir. 1995). A prima facie case can be established by debtors failure to make post-petition payments. In re Elder-Beerman Stores Corp., 201B.R. 759, 761 (Bankr. S.D. Ohio 1996). In the instant case, D&F has established a prima facie case for relief from the automatic stay. The continued use of the collateral without any arrangement to compensate D&F for its use during the pendency of the chapter 11 case results in a diminution of its interest in its collateral. Such circumstances constitute cause, within the meaning of Section 362(d)(1), entitling D&F to relief from the stay. United Savings Assn. Of Texas v. Timbers of Inwood Forest Assoc., Ltd. (In re Timbers of Inwood Assoc., Ltd.), 484 U.S. 365, 108 S. Ct. 626, 98 L.Ed.2d 740 (1988).

CONCLUSION D&F has a lien is on Fixtures being held and used by Debtors. The Debtors had both
KOTZ, SANGSTER, WYSOCKI & BERG, P.C. ATTORNEYS AND COUNSELORS AT LAW, 400 RENAISSANCE CENTER, SUITE 2555, DETROIT, MICHIGAN 48243-1675

actual and constructive notice of the lien and the liens were properly perfected. The Debtors have not offered any adequate protection to D&F and has continued to use the Fixtures to D&Fs detriment. This constitutes cause for relief from the automatic stay. WHEREFORE, D&F Corporation requests this Court enter the form of Order attached hereto as Exhibit A and award D&F Corporation its costs, attorneys fees, and any other relief as this Court deems just and appropriate.

Respectfully Submitted, Kotz, Sangster, Wysocki & Berg, P.C.

/s/ Frederick A. Berg Frederick A. Berg (P38002) Rebecca M. Decoster (P62013) Attorneys for D&F Corporation 400 Renaissance Center, Suite 2555 Detroit, MI 48243 Telephone: (313) 259-8300 Dated: April 6, 2006

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