UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION In re: COLLINS & AIKMAN CORPORATION, et al.

, Debtors. ) ) ) ) ) ) ) Chapter 11 Case No. 05-55927-R (Jointly Administered) Hon. Steven W. Rhodes

MT. McKINLEY INSURANCE COMPANYS AND EVEREST REINSURANCE COMPANYS AMENDED OBJECTION TO DEBTORS MOTION FOR AN ORDER APPROVING SALE OF ASSETS OF DEBTORS CARPET AND ACOUSTICS BUSINESS Mt. McKinley Insurance Company (formerly known as Gibraltar Casualty Company) and Everest Reinsurance Company (formerly known as Prudential Reinsurance Company) (collectively, Everest) hereby objects to Debtors Motion For an Order Approving Sale Of Substantially All of the Assets Of Debtors Carpet and Acoustics Business Free And Clear Of Liens, Claims, Encumbrances And Interests And Related Relief (the Motion). Everest issued certain historical liability insurance policies to Gulf + Western Industries, Inc. under which Debtors have in the past or may in the future claim rights to insurance coverage. The Everest policies contain provisions which prohibit the assignment of those policies without Everests consent thereto. Policy provisions prohibiting assignment without an insurers consent are routinely recognized and upheld by courts. See Employers Mut. Liab. Ins. Co. v. Mich. Mut. Auto. Ins. Co., 101 Mich.App. 697, 702, 300 N.W.2d 682 (1980) (assignment in violation of an anti-assignment clause in a policy voided coverage); Century Indem. Co. v. Aero-Motive Co., 318 F.Supp.2d 530 (W.D. Mich. 2003) (quoting General Accident Insurance Co. of America v. Superior Court, 55 Cal.App.4th 1444 (1997)). Moreover, these provisions are intended to protect the benefit of Everests bargain, by

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ensuring that it will not have different and greater burdens foisted upon it than what Everest agreed to insure. See, e.g., Henkel Corp. v. Hartford Accident and Indemnity Co., 29 Cal.4th 934, 129 Cal.Rptr.2d 828, 62 P.3d 69 (Cal. 2003) (upholding liability insurers right to consent to assignment because [i]f both assignor and assignee were to claim the right to defense, the insurer might effectively be forced to undertake the burden of defending both parties). 1 Debtors Motion seeks approval of a sale of substantially all of Debtors carpet and acoustics business. Debtors intent with respect to historical insurance policies that

potentially covered that business, however, such as the Everest policies, is less than clear. Debtor excludes from the Sale so-called Excluded Assets, which are defined, inter alia, as all Contracts that are not Assumed Contracts (Motion, Asset Purchase Agreement 2.2(d)) and to the extent relating to (A) any Excluded Assets or (B) liabilities of the Sellers to the extent such liabilities are not Assumed Liabilities, all rights (i) under Sellers insurance policies relating to the Business (including, without limitation, health insurance, workers compensation insurance and life insurance) (id. at 2.2(h)). Assumed Liabilities, in turn, include all Liabilities under the Assumed Contracts (id. at 2.3(a)), all other Liabilities with respect to the Business, the Purchased Assets, or Transferred Employees arising after the Closing (id. at 2.3(c)), and all Environmental Liabilities which arise as a result of Purchasers ownership or operation of the Purchased Assets after the Closing Date (id. at 2.3(e)). The Motion nowhere identifies the particular insurance policies that are part of the Excluded Assets, nor whether Debtors
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For a fuller explanation of Everests rights with respect to the anti-assignment provisions in its policies and the increased risks Everest may suffer if its policies are assigned without its consent, Everest hereby incorporates, as though fully set forth herein, Paragraphs 2-4 and 6-8 of the Objection of CNA, joined by Certain Insurers, to Approval of Sale Transaction Pursuant to Debtors Motion for the Entry of Orders Approving Bidding Procedures, Sale of Certain of the Assets of the Debtors Interior Plastics Group Free and Clear of Liens, Claims, Encumbrances and Interests and Related Relief, filed with the Court at Dkt. No. 6074.
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insurance policies are, or are not, considered Assumed Contracts that will be transferred to a Purchaser. Debtors intent with respect to the Everest policies is, therefore, unclear at best. The above-described definitions appear intended to exclude insurance policies (including Everests) from the Sale. But that language is unclear, and could be construed to exclude the assignment of insurance policies only with respect to Excluded Assets and those of Debtors liabilities which are not Assumed Liabilities. Under such a reading, insurance for Assumed Liabilities could or would be assigned pursuant to the Sale Agreement, and the Purchaser would attempt to access coverage or otherwise assert a claim against the Everest policies at a later date without Everests consent thereto, in direct contravention of the anti-assignment provisions in the Everest policies. 2 The Court should not approve the Motion insofar as it purports to effect any assignment of the Everest policies without Everests consent. Moreover, the Court should order the Debtors to identify which insurance policies it is purporting to assign and describe why it believes those insurance policies potentially cover the Assets being sold. The potential for mischief created by the Sale Agreement as currently written becomes more acute upon examining Debtors proposed Order, which provides, among other things, that [t]he transfer of the Assets and the Assumed Contracts to the Purchaser pursuant to the Purchase Agreement constitutes a legal, valid, and effective transfer of such assets and contracts and shall vest the Purchaser with all right, title, and interest of the Debtors in and to such assets and contracts. Order at 8. Thus, not only would Everests policies be assigned to

Everest twice attempted to obtain clarification on this issue from Debtors counsel in order to avoid the time and expense of filing this objection, and to avoid the depletion of the Courts resources in deciding this issue. As of the time of this writing, however, Everest has yet to receive any response from Debtors.
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the Purchaser without Everests consent and in contravention of the policy language and applicable non-bankruptcy law, but Debtors would have obtained by fiat (and without affording Everest the full and fair opportunity to brief and argue the issue) a declaration from this Court that the otherwise unlawful assignment is valid. The finding contained in Paragraph 8 of the Order cannot be made in the context of this Motion over Everests objections, because its effect would be to predetermine coverage issues that must be resolved in a plenary lawsuit or adversary proceeding rather in the context of the Sale Agreement. WHEREFORE, for the reasons stated above, Everest respectfully requests that this Court enter an order denying the Motion insofar as it purports to, or could be construed to, assign insurance coverage allegedly provided by Everest; and for such other and further relief as the Court deems just and proper. /s/ Seth D. Gould (P45465) Wienner & Gould, P.C. 950 W. University Dr., Ste. 350 Rochester, MI 48307 (248) 841-9400; Fax 652-2729 Primary E-Mail: sgould@wiennergould.com Dated: May 14, 2007 Mark D. Plevin Joseph L. Meadows Leslie A. Epley CROWELL & MORING LLP 1001 Pennsylvania Avenue, N.W. Washington, D.C. 20004 Telephone: (202) 624-2500 Facsimile: (202) 628-5116 Attorneys for Mt. McKinley Insurance Company and Everest Reinsurance Company

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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 (Jointly Administered) Hon. Steven W. Rhodes

CERTIFICATE OF SERVICE I hereby certify that on May 14, 2007, I electronically filed MT. McKINLEY INSURANCE COMPANYS AND EVEREST REINSURANCE COMPANYS AMENDED OBJECTION TO DEBTORS MOTION FOR AN ORDER APPROVING SALE OF ASSETS OF DEBTORS CARPET AND ACOUSTICS BUSINESS with the Clerk of the Court using the ECF system which will send notification of such filing to the following: Josef S. Athanas josef.athanas@lw.com Jason W. Bank jbank@schaferandweiner.com Paige E. Barr pbarr@jaffelaw.com Robert N. Bassel robert.bassel@kkue.com, robertbassel@hotmail.com Leonora K. Baughman ecf@kaalaw.com Frederick A. Berg fberg@kotzsangster.com, mmoye@kotzsangster.com Brendan G. Best bbest@dykema.com Kellie M. Blair kblair@garanlucow.com, kpickard@garanlucow.com Susanna C. Brennan sbrennan@clarkhill.com, sdennison@clarkhill.com Lynn M. Brimer lbrimer@stroblpc.com, sfraser@stroblpc.com James R. Bruinsma jbruinsma@mnds-pllc.com Charles D. Bullock cbullock@gatecom.com, cdbullock@msn.com;leslieb@gatecom.com Dan E. Bylenga ecf-deby@rhoadesmckee.com Kevin C. Calhoun kcc@cdg-law.com, kevin@lawyermich.com Judy B. Calton jcalton@honigman.com Marc Carmel mcarmel@kirkland.com, szemnick@kirkland.com; mmccarthy@kirkland.com; jboken@krollzolfocooper.com; agorman@kirkland.com; mmarcus@kirkland.com; nbohan@kirkland.com; rschrock@kirkland.com James K. Cleland jcleland@brinkshofer.com, ibarbu@brinkshofer.com I. William Cohen coheniw@pepperlaw.com, ale xsym@pepperlaw.com Dawn R. C! opley dcopley@dickinsonwright.com, dnavin@dickinsonwright.com Michael G. Cruse mcruse@wnj.com, hziegler@wnj.com Julius O. Curling curlingj@michigan.gov John J. Dawson jdawson@quarles.com James E. DeLine jed@krwlaw.com, pal@krwlaw.com

Shannon L. Deeby sdeeby@clarkhill.com Robert J. Diehl rdiehl@bodmanllp.com, cborza@bodmanllp.com Robert J. Diehl rdiehl@bodmanllp.com, cborza@bodmanllp.com Angela Dodd dodda@sec.gov Sara Eagle eagle.sara@pbgc.gov, efile@pbgc.gov David H. Ellenbogen dellenbogen@wiennergould.com, jtibbs@wiennergould.com Earle I. Erman eerman@ermanteicher.com Michael S. Etkin metkin@lowenstein.com Joseph M. Fischer brcy@carsonfischer.com Deborah L. Fish dfish@allardfishpc.com, allardfishpc@yahoo.com Joseph Foster joe.foster@mclane.com David H. Freedman dfreedman@ermanteicher.com Alexis Freeman afreeman@akingump.com Timothy A. Fusco fusco@millercanfield.com, harris@millercanfield.com Niraj R. Ganatra Nganatra@uaw.net Celeste R. Gil l gillcr@michigan.gov, braithwaitep@michigan.gov Rozanne M. Giunta rmgiunta@lambertleser.com Stuart A. Gold sgold@glmpc.com Seth D. Gould sgould@wiennergould.com, jtibbs@wiennergould.com Timothy R. Graves tgraves@allardfishpc.com, allardfishpc@yahoo.com Jonathan S. Green green@millercanfield.com Richard A. Green rgreenbankruptcyeast@yahoo.com Lisa Sommers Gretchko lgretchko@howardandhoward.com, dbrandon@howardandhoward.com Christopher A. Grosman BRCY@CarsonFischer.com Robert J. Hahn rhahn@cmda-law.com Paula A. Hall hall p@butzel.com Biana Hamady ecf@shermeta.com Michael C. Hammer mchammer2@dickinsonwright.com Wallace M. Handler whandler@swappc.com Willard E. Hawley whawley@mcdonaldhopkins.com, shelly.harrow@gmail.com Ryan D. Heilman rheilman@schaferandweiner.com, jsouthworth@schaferandweiner.com Robert S. Hertzberg hertzbergr@pepperlaw.com Timothy Hillegonds thillegonds@wnj.com, jnikodemski@wnj.com Terrance A. Hiller tah@kompc.com, tlj@kompc.com Jeannette Eisan Hinshaw jhinshaw@boselaw.com, pdidandeh@boselaw.com Roland Hwang hwangr@michigan.gov, ClarkF@michigan.gov Michael J. Kaczka mkaczka@mcdonaldhopkins.com Mimi D. Kalish mimi@stillmanlaw.com Daniel M. Katlein dkatlein@allardfishpc.com, allardfishpc@yahoo.com Kristi A. Katsma kkatsma@dickinsonwright.com, dnavin@dickinsonwright.com Adam L. Kochenderfer akochenderfer@honigman.com Deborah Kovsky-Apap kovskyd@pepperlaw.com Kay Standridge Kress kressk@pepperlaw.com Richard E. Kruger rkruger@jaffelaw.com, dburris@jaffelaw.com Patrick J. Kukla brcy@carsonfischer.com

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Kevin L. Larin kll2@krwlaw.com Jonathan E. Lauderbach avery@curriekendall.com Donna J. Lehl dlehl@glmpc.com, donnalehl@bigfoot.com David A. Lerner dlerner@plunkettcooney.com, nwinagar@plunkettcooney.com Ira M. Levee ilevee@lowenstein.com Dennis W. Loughlin dloughlin@stroblpc.com, sfraser@stroblpc.com John C. Louisell jcl@h2law.com, kaw@h2law.com Hannah Mufson McCollum mccolluh@pepperlaw.com, alexsym@pepperlaw.com Ralph E. McDowell rmcdowell@bodmanllp.com Ralph R. McKee rmckee@allardfishpc.com, allardfishpc@yahoo.com David G. Michael &n! bsp davi d.michael@waltondonnelly.com Arthur W. Miller awmpclaw@ameritech.net, m3marie@aol.com Judith Greenstone Miller jmiller@jaffelaw.com, jtravick@jaffelaw.com James P. Murphy murph@berrymoorman.com Kelly A. Myers kmyers@ma-pllc.com Max J. Newman mnewman@schaferandweiner.com Drew S. Norton drew@nortonlawyers.com David J. Nowaczewski dnowaczewski@bodmanllp.com, lstewart@bodmanllp.com Judy A. O'Neill joneill@foley.com, krose@foley.com Michael R. Paslay mike.paslay@wallerlaw.com, Cathy.thomas@wallerlaw.com;Chris.cronk@wallerlaw.com; wallerbankruptcy@wallerlaw.com; robert.welhoelter@wallerlaw.com Robert A. Peurach rpeurach@fitz-dak.com Debra Beth Pevos dpevos@swappc.com Marc S. Pfeuffer pfeuffer.marc@pbgc.gov, efile@pbgc.gov Robert J. Pineau rjp@krwlaw.com James A. Plemmons jplemmons@dickinsonwright.com Thomas B. Radom Radom@butzel.com Shawn M. Riley sriley@mcdonaldhopkins.com Louis P. Rochkind lrochkind@jaffelaw.com, dburris@jaffelaw.com Ronald L. Rose rrose@dykema.com Peter C.L. Roth peter.roth@do j.nh.gov, jackie.lawrie@doj.nh.gov Edward Todd Sable tsable@honigman.com Daniella Saltz dsaltz@ford.com David E. Schlackman brcy@carsonfischer.com Craig S. Schoenherr ecf@orlaw.com Ray C. Schrock rschrock@kirkland.com Eric B. Schultenover eric.schultenover@wallerlaw.com, Angela.criswell@wallerlaw.com; Chris.cronk@wallerlaw.com; wallerbankruptcy@wallerlaw.com Mary Kay Shaver mkshaver@varnumlaw.com Howard S. Sher howard@jacobweingarten.com Jordan M. Sickman jsickman@honigman.com Robert K. Siegel rob@jacobweingarten.com Steven A. Siman sgroh@simanlaw.net, sas@simanlaw.net John A. Simon jsimon@foley.com Stephen Edward Spence steve.e.spence@usdoj.gov

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Leslie Stein lstein@seyburn.com, seccles@seyburn.com Kurt A. Steinke ecf@orlaw.com John W. Stevens bankruptcydetroit@irscounsel.treas.gov, john.w.stevens@irscounsel.treas.gov Kevin N. Summers ksummers@psedlaw.com, mmichael@psedlaw.com Julie Beth Teicher jteicher@ermanteicher.com Julie Beth Teicher jteicher@ermanteicher.com Sheryl L. Toby stoby@dykema.com, wkyles@d ykema.com Erin Lindsay Toome! y etoomey@foley.com Brian R. Trumbauer btrumbauer@bodmanllp.com Jonathan T. Walton jonathan.walton@waltondonnelly.com Daniel J. Weiner dweiner@schaferandweiner.com Robert B. Weiss rweiss@honigman.com Mary K. Whitmer mkw@kjk.com Robert D. Wolford ecfwolfordr@millerjohnson.com Scott A. Wolfson swolfson@honigman.com Michael I. Zousmer mzousmer@nathanneuman.com, trackley@nathanneuman.com

05-55927-swr Notice will not be electronically mailed to: ASM Capital, L.P. Anchor Manufacturing Group BNY Midwest Trust Company Michael Barczak Bowles Fluidics Corporation Leslie Brown William T. Burgess One Detroit Center 500 Woodward Ave. Suite 4000 Detroit, MI 48226 CB Richard Ellis, Inc. CONSOR Intellectual Asset Management Cherry Corporation Richard M. Cieri

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153 East 53rd Street New York, NY 10022-4611 City of Dover, New Hampshire Ralph Colasuonno 12900 Hall Road, Ste. 350 Sterling Heights, MI 48313-1151 Vincent A. D'Agostino 65 Livingston Avenue Roseland, NJ 07068 Dallas County Davis Polk & Wardwell Debt Acquisition Company of America Delphi Corporation Randy Doub 110 Arlington Boulevard PO Drawer 8668 Greenville, NC 27835-8668 Eastman Chemical Financial Corporation Saul Eisen El Paso Natural Gas Company Ernst & Young LLP Thomas Evans Exelon Energy Company

Federal Express Corporation Felton Brush, Inc. Flexsys America, L.P. Greenman's Printing & Imaging

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Haley & Aldrich, Inc. Jeffrey K. Helder CUNNINGHAM DALMAN, P.C. 321 Settlers Road P.O. Box 1767 Holland, MI 49422-1767 Hilco Appraisal Services, LLC Thomas E. Hill Alvarez & Marsal, LLC William H. Horton Tenth Floor Columbia Center 101 West Big Beaver Road Troy, MI 48084-5280 Nancy Howard Huntsman International International Union UAW Edmund M. Kaufman Keen Realty, LLC Kirkland & Ellis Eric Kurtzman Kurtzman Carson Consultants 12910 Culver Blvd. Suite I Los Angeles, CA 90066 LDM Technologies, Inc. Lathrop & Gage L.C. Pearl Lattaker Office of the California Attorney Genera 300 S. Spring Street Ste. 1702 Los Angeles, MI 90013

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Law Debenture Trust Company of New York Lazard Freres & Co. LLC Dayne A. Legassie John L. Livesay 100 McMorran Blvd. Port Huron, MI 48060 Paul A. Lucey 100 East Wisconsin Ave. Suite 33! 00 Mi lwaukee, WI 53202 MacKay Shields, LLC Maciorowski, Sackmann & Ulrich Jack May Meridian Automotive Systems, Inc. Bruce A. Miller 600 W. Lafayette Blvd., 4th Floor Detroit, MI 48226 Mayer Morganroth 3000 Towncenter Ste. 1500 Southfield, MI 48075 Nugar, S.A. de C.V. O'Mara Incorporated Pharr Yarns, Inc. Edith Stuart Phillips Bankruptcy & Collections Division P. O. Box 12548 Austin, TX 78711-2548 PricewaterhouseCoopers LLP

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Paul J. Randel 211 W. Fort St. Suite 700 Detroit, MI 48226 Barry W. Ridings Robotic Production Technology William E. Schonberg 2300 B P America Bldg 200 Public Square Cleveland, OH 44114-2378 Sitrick And Company, Inc. Donald F. Slavin 1200 N. Telegraph Rd. Pontiac, MI 48341 South Carolina Department of Health and Environmental Control Michael S. Stamer Akin, Gump, Strauss, Hauer & Feld, LLP 590 Madison Avenue, 20th Floor New York, NY 10022 J. Michael Stepp Harold R. Sunday THC Investors LP Thomas J. Tallerico 201 W. Big Beave r Rd. Suite 500 Troy, MI 48084 Tarrant County Tennessee Department of Revenue Texas Comptroller of Public Accounts

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The Brown Corporation of America The Dow Chemical Company Third Avenue Trust Trade -Debt. Net U.S. Customs and Border Protection Unifi, Inc. Unique Fabricating, Inc. United States Steel Workers of America United States of America (IRS/PBGC) 211 W. Fort Street Suite 2001 Detroit, MI 48226 Washington Penn Plastic Co., Inc. John E. West Vinson & Elkins L.L.P. 2300 First City Tower 1001 Fannin St. Houston, TX 77002-6760 /s/ Seth D. Gould (P45465) Wienner & Gould, P.C. 950 W. University Dr., Ste. 350 Rochester, MI 48307 (248) 841-9400; Fax 652-2729 Primary E-Mail: sgould@wiennergould.com Dated: May 14, 2007

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