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

, Chapter 11 Case No. 05-55927 (Jointly Administered) Hon. Steven W. Rhodes / COLLINS & AIKMAN CORPORATION, COLLINS & AIKMAN PRODUCTS, CO., COLLINS & AIKMAN AUTOMOTIVE EXTERIORS, INC. (f/k/a TEXTRON AUTOMOTIVE EXTERIORS) and JPS AUTOMOTIVE, INC. (d/b/a PACJ, INC.), Plaintiffs, vs. VALEO, VALEO VISION MAZAMET, VALEO SYLVANIA LLC and VALEO SWITCHES & DETECTION, Defendants. / MOTION FOR PROTECTION FROM MEDIATION NOTICE

Debtors.

Adv. Pro. No. 07-05587

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Defendants Valeo, Valeo Vision Mazamet, Valeo Sylvania LLC and Valeo Switches & Detection (collectively, Valeo)1, by their attorneys, Honigman Miller Schwartz and Cohn LLP, for their Motion for Protection from Mediation Notice, state: 1. In the complaint in the captioned adversary proceeding, Plaintiffs seek to avoid

and recover in excess of $2.1 million in transfers to Valeo. Approximately $1.4 million of these transfers (the Canadian Transfers) are not preferences because, if made, they were transfers in payment for goods sold by Valeo to Collins & Aikman Canada, Inc. (C&A Canada), a nondebtor affiliate of the Debtors. 2. The Canadian Transfers are not preferential because they were not on account of

antecedent debt of any of the Debtors. Plaintiffs contend the Canadian Transfers, however, are fraudulent transfers because they were from an account in the name of one of the Debtors. Plaintiffs take the position they will compromise preference claims, but will not compromise fraudulent transfer claims. 3. Valeo believes the Canadian Transfers were not fraudulent transfers for many

reasons, including in particular the operations of the Debtors prepetition cash management system, intercompany transactions between C&A Canada and the Debtors, and consideration flowing from C&A Canada to the Debtors in exchange for the Canadian Transfers.

1 The named defendant Valeo Vision Mazamet is believed to refer to Valeo Vision SAS and Valeo

Vision SAS proceeds as if it were a properly named defendant. The named defendant Valeo Switches & Detection is believed to refer to Valeo Switches & Detection Systems, Inc., and Valeo Switches & Detection Systems, Inc. proceeds as if it were a properly named defendant. Valeo Vision SAS and Valeo Switches & Detection Systems, Inc. reserve the right to assert (i) that they are not properly named defendants in this adversary proceeding and (ii) any related defenses. Plaintiffs have also named Valeo as a defendant in this adversary proceeding. To the best of defendants knowledge, information and belief, there is no related existing corporate entity named Valeo.

4.

On November 30, 2007, this Court entered its Amended Order Regarding

Mediation (the Mediation Order) (Docket No. 8661), which provided for a stay of this proceeding and the other adversary proceedings to facilitate mediation. 5. Under Paragraph 23 of the Mediation Order, Valeo, as part of a Joint Defense

Group of defendants in adversary proceedings defending claims relating to Canadian Transfers (the Joint Defense Group), requested concurrence in relief from the mediation stay for purposes of discovery and the filing of a dispositive motion relating to the Canadian Transfers. 6. Plaintiffs concurred in relief from the mediation stay for purposes of limited

discovery, but did not concur in the filing of a dispositive motion. 7. The Joint Defense Group, to relieve the burden on Plaintiffs, proposed joint

discovery to Plaintiffs, but has not had sufficient answers to date: (a) On April 25, 2008, the Joint Defense Group filed a Joint Request for

Production of Documents on Plaintiffs (the First Request) seeking a variety of documents relevant to Plaintiffs claims that various payments by the Plaintiffs to the various members of the Joint Defense Group were fraudulent transfers. (b) On June 11, 2008, Plaintiffs served Responses and Objections to

Defendants Request for Production of Documents, but have not yet produced documents. Plaintiffs have promised, subject to reaching certain understandings with the Joint Defense Group regarding a Confidentiality Order and other matters, that they would produce documents in response to the First Request. (c) On May 9, 2008, the Joint Defense Group served a Joint Notice of Taking

30(b)(6) Deposition of Plaintiffs and sought to depose a corporate representative of Plaintiffs regarding the Plaintiffs consolidated Cash Management System and various other information

regarding the transfer of cash and accounts receivables among the various Plaintiffs in relation to the claims by the Plaintiffs that they had made various transfers of cash to the members of the Joint Defense Group which were recoverable as fraudulent transfers. (d) On June 11, 2008, Plaintiffs responded and objected to Defendants Notice

of Taking 30(b)(6) Deposition of Plaintiffs (the Notice). Plaintiffs and members of the Joint Defense Group have engaged in several conference calls to resolve various objections to the Notice, but Plaintiffs have not yet produced any witness in response to the Notice. 8. On August 24, 2008, the Joint Defense Group served Defendants Second Set of

(I) Interrogatories; (II) Requests for Admissions; and (III) Request for Production of Documents (the Second Request). Plaintiffs answers to the Second Request are due on September 26, 2008. 9. Upon information and belief, Plaintiffs responses to the Second Request will

establish: C&A Canada sold its accounts receivable to a bankruptcy remote entity named Carcorp, Inc. (Carcorp); Carcorp in turn factored the C&A Canada accounts receivable to General Electric Commercial Corporation (GECC); GECC deposited the funds it paid to Carcorp for the C&A Canada accounts receivable in an account in the name of Collins & Aikman Products Corporation (C&A Products); and C&A Products made the Canadian Transfers in payment of C&A Canada accounts payable to the Joint Defense Group. Thus, the Joint Defense Group expects the response to the Second Request to establish that there was reasonably equivalent value to the Debtors for the Canadian Transfers as a matter of law. 10. Based on information already received and information the Joint Defense Group

anticipates receiving in the near future, on August 22, 2008, the Joint Defense Group sought concurrence from Plaintiffs in relief from the mediation stay to file a joint motion for summary

judgment premised on, without limitation, the following theories: (a) judicial estoppel; (b) res judicata; and (c) failure to state a claim. 11. On September 2, 2008, Plaintiffs served their Notice of Scheduling of Mediation

(the Mediation Notice), scheduling mediation of the subject adversary proceeding for September 23, 2008. 12. On September 3, 2008, Plaintiffs stated they would concur in relief from the

mediation stay for purposes of filing a dispositive motion on the condition, among others, that discovery is stayed until the dispositive motion is decided. 13. As discussed above, Valeo believes the answers to the Second Request will

establish reasonably equivalent value and support a dispositive motion, and therefore does not agree to such condition. 14. Mediation at this time would be futile because: (a) Plaintiffs are unwilling to

compromise claims based on the Canadian Transfers; (b) the Joint Defense Group has not received the discovery responses it believes helpful or necessary to its dispositive motion and therefore will be unable to present such information to the mediator; and (c) Valeo has not yet been able to file its dispositive motion, which it believes will prevail, resulting in dismissal of the complaint as to the Canadian Transfers. 15. At the recent hearing on Plaintiffs motion to extend the time for mediation,

Valeos counsel raised the issue that several of the adversary proceedings were off the mediation track because of discovery and potentially filing dispositive motions, and therefore could not be mediated by September 30, 2008. To the best of Valeos counsels memory, the Court

responded that if such off-mediation-track adversary proceedings were not otherwise resolved,

there would be subsequent post September 30, 2008 mediation. Accordingly, there is no need to mediate this adversary proceeding at this time. 16. Valeo requested that the Mediation Notice be withdrawn, but Plaintiffs denied

concurrence on the grounds that Plaintiffs want to take discovery of the Joint Defense Group. 17. Valeo plans to file a motion for relief from the mediation stay to file its

dispositive motion. Paragraph 23 of the Mediation Order provides: The filing of such a motion shall stay mediation until the Court determines an appropriate schedule for mediation. WHEREFORE, Valeo requests (a) protection from the Mediation Notice so that Valeo can obtain responses to the pending discovery, file its dispositive motion, and if the proceeding is not otherwise resolved, mediate after the dispositive motion is determined, and (b) such further relief as is proper and just.

HONIGMAN MILLER SCHWARTZ AND COHN LLP Attorneys for Valeo, Valeo Vision Mazamet, Valeo Sylvania LLC and Valeo Switches & Detection

Dated: September 8, 2008

By:

/s/ Judy B. Calton Judy B. Calton (P38733) E. Todd Sable (P54956) 2290 First National Building 660 Woodward Avenue Detroit, MI 48226 Telephone: (313) 465-7344 Facsimile: (313) 465-7345 Email: jcalton@honigman.com

DETROIT.3301315.1

EXHIBIT A

UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION In re: COLLINS & AIKMAN CORPORATION, et al., Chapter 11 Case No. 05-55927 (Jointly Administered) Hon. Steven W. Rhodes / COLLINS & AIKMAN CORPORATION, COLLINS & AIKMAN PRODUCTS, CO., COLLINS & AIKMAN AUTOMOTIVE EXTERIORS, INC. (f/k/a TEXTRON AUTOMOTIVE EXTERIORS) and JPS AUTOMOTIVE, INC. (d/b/a PACJ, INC.), Plaintiffs, vs. VALEO, VALEO VISION MAZAMET, VALEO SYLVANIA LLC and VALEO SWITCHES & DETECTION, Defendants. / ORDER GRANTING PROTECTION FROM MEDIATION NOTICE This matter having come before the Court upon the Defendants Motion for Protection from Mediation Notice (the Motion); the Court having considered the Motion, any opposition, the argument of counsel, and the record in this adversary proceeding and in the Chapter 11 cases; no further notice or hearing being necessary; capitalized terms not defined herein have the meaning as defined in the Motion; and the Court being fully advised in the premises; IT IS HEREBY ORDERED THAT: 1. Valeo is given protection from the Mediation Notice.

Debtors.

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2. _____m. 3.

A status conference shall be scheduled for _____________________, 2008 at

Prior to the status conference, Plaintiffs and the Joint Defense Group shall agree

on and submit to the Court a schedule to complete pending discovery and brief the proposed Joint Defense Group dispositive motion. 4. If this adversary proceeding is not otherwise resolved, after the dispositive motion is

decided, the Court will hold a status conference to set mediation and further deadlines in this proceeding.

DETROIT.3301315.1