UNITED STATES BANKRUPTCY COURT FOR THE EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION

In re:

Chapter 11

Collins & Aikman Corporation, et al. Debtors.

Case No. 05-55927 (Jointly Administered) Honorable Steven W. Rhodes

_________________________________/ MOTION SEEKING DETERMINATION THAT BUTZEL, LONG, P.C., LOCAL COUNSEL FOR THE OFFICIAL UNSECURED CREDITORS COMMITTEE DOES NOT REPRESENT AN ADVERSE INTEREST IF MAX J. NEWMAN JOINS BUTZEL, LONG WHILE REPRESENTING CERTAIN PARTIES IN INTEREST TO THIS CASE AFTER CONFIRMATION OF DEBTORS PLAN OF LIQUIDATION Max J. Newman (Movant) states: Introduction: Movant requests that the Court determine that if he joins Butzel, Long, P.C. (Butzel) while representing certain parties- in- interest to this case, Butzel will not be found to be representing another entity having an adverse interest in connection with the case which would be in violation of 11 U.S.C. 1103(b). General Background: 1. Debtors each filed Voluntary Petitions for relief under Chapter 11 of the

Bankruptcy Code on May 17, 2005 (the Petition Date). 2. Debtors each remain in possession of their assets and are operating their

businesses as debtors- in-possession pursuant to 11 U.S.C. 1107 and 1108 of the Bankruptcy Code.

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Representation of Committee As Local Counsel: 3. Butzel, Long, P.C. (Butzel) serves as local counsel to the Official Unsecured

Creditors Committee (the Committee) in this matter. 4. The Committee is also represented by Akin, Gump, Strauss, Hauer & Feld, LLP

(Akin, Gump). 5. Akin, Gump has taken the lead role in representing the Committee in this matter,

as its fees have constituted approximately 93.5% of the legal fees incurred by the Committee in this matter. 6. Butzels role on behalf of the Committee in this case can best be described as a

true local counsel role. 7. The Committee has indicated that it does not object to this Motion.

Max J. Newmans Role in This Case:

8.

On December 31, 2006, Movant left his former law firm, Schafer and Weiner,

PLLC (S&W). Shortly thereafter, Movant formed the Law Offices of Max J. Newman, P.C. 9. Since mid-January, Movants intention has been to join Butzel in its Commercial

Workout and Bankruptcy Practice. 10. Movant and Butzel have agreed on all terms that would allow Movant to join

Butzel. However, since January, Movant and Butzel have deferred that move pending resolution of matters related to Debtors bankruptcy.

11.

At S&W, Movant represented a number of parties related to the C&A bankruptcy.

Except as described below, Movants services generally were provided to unsecured creditors with discrete issues in the Debtors case. 12. In addition, since January 2007, Movant has provided the following services to

the following clients (the Clients): a. Johnson Controls, Inc. Movant represents Johnson Controls, Inc. (Johnson Controls) as co-counsel related to issues involving production at 2 of the Debtors facilities, as well as a pending dispute over approximately $5.4 million that Debtors assert Johnson Controls owes them. Johnson Controls asserts setoffs that exceed this amount, and the parties have engaged in substantial negotiations over the potential resolution of this issue. Johnson Controls also objected to the confirmation of Debtors Plan solely to preserve its setoff claim, and its objection was resolved; b. Beirne Maynard & Parsons (BMP) Movant served as local counsel to BMP in connection with its objection to Debtors Plan to preserve a constructive trust claim. BMPs objection was resolved. c. 17 separate defendants in 18 preference matters, with preference claims in the face amount of almost $14 million dollars. \Chapter 11 Plan: 13. The Chapter 11 Plan was confirmed on or about Thursday, July 12, 2007. The

confirmed Plan terminates the role of the Committee 3 0 days after the Effective Date (approximately October 1)

14.

Once the Chapter 11 Plan is effective, 11 U.S.C. 1103(b) no longer applies to

Butzel or Movant. 15. 16. Until the Plan is effective, however, 11 U.S.C. 1103(b) applies. The Committees role between now and October 1, 2007 the approximate date it

will dissolve -- is expected to be minimal.

Representation of the Committee and Representation of the Clients 17. 11 U.S.C. 1103(b) states: An attorney employed to represent a committee appointed under section 1102 of this title may not, while employed by such committee, represent any other entity having an adverse interest in connection with the case. Representation of one or more creditors of the same class as represented by the committee shall not per se constitute the representation of an adverse interest. 18. An interest must be adverse to that of the Committee, and not merely to the

bankruptcy estate. See, In re Enron Corp. 2003 WL 223455 (S.D. N.Y. 2003)(Milbank violates 1103(b) if it simultaneously represents both the Committee and another party, with an interest adverse to the committee, in matters related to the bankruptcy proceeding) citing Daido Steel Co., Ltd. V. Official Comm. Of Unsecured Creditors, 178 B.R. 129, 132 (N.D. OH 1995). 19. In determining whether an interest is adverse, Courts have applied a common See, e.g., In re AOV Industries, Inc., 798 F.2d 491, 496- 497 (D.C. Cir.

sense approach.

1986)(representation of disbursing agent not adverse, even though disbursing agent would have to review his own firms fees); In re National Liquidators, Inc., 182 B.R. 186 (S.D. Oh. 1995)(1103 is designed to prohibit any representation that would interfere with counsels vigorous advocacy for either client, jeopardize counsels undivided loyalty to either client, or endanger confidences and secrets of either client, or where there exists even appearance of

impropriety); In re Lion Group, 44 B.R. 684, 687 (Bankr. S.D. N.Y. 1984) (Congress intended substance to prevail over form. Where the representation does not entail an actual or potential conflict of interests or present an appearance of impropriety, 1103(b) is not to be interpreted to preclude a committee from engaging counsel of its choice); In re Martin, 817 F.2d 175, 183 (1st Cir. 1987) ( Horrible imaginings alone cannot be allowed to carry the day. Not every conceivable conflict must result in sending counsel away to lick his wounds). 20. The inherent conflict of interest raised by dual representation of unsecured

creditors was by itself insufficient, and too theoretical, to warrant a finding of disinterestedness. Halbert v. Yousif, 225 B.R. 336, 349 (E.D. Mich. 1998) citing In re National Liquidators, Inc., 182 B.R. 186 (S.D. Oh. 1995). 21. Section 1103(b)s bar to attorney representation includes a requirement that there

exist some allegation or evidence suggesting the likelihood of some actual dispute, strife, discord or difference between the committee and its constituents or member. In re National Liquidators, Inc. 182 B.R. 186, 192-193 (S.D. Oh. 1995). 22. In this case, the issues raised by the Clients including the defense of preference

claims and a dispute over Johnson Controls claim. 23. In dicta, the National Liquidators case held that a challenge to a claim (such as

exists with Johnson Controls) or commencement of a recovery action, as exists with the numerous preference defendants, would create a disqualifying adverse interest. In re National Liquidators, Inc. 182 B.R. 186, 193 (S.D. Oh. 1995). 24. However, in this case, the challenge to Johnson Controls claim is irrelevant to the

Committee if the full amount is recovered from Johnson Controls, or if nothing is recovered from Johnson Controls, the recovery will go entirely to JP Morgan, Debtors primary secured

creditor. Upon information and belief, JP Morgan is sufficiently unsecured that, except as specifically carved out by the Plan, nothing will go to unsecured creditors. 25. Similarly, representation of approximately $14MM in preference defendants is

not an adverse interest. Under the Plan, unsecured creditors receive only a 25% distribution of the net proceeds of preference actions. 26. Legal fees for recovery of preference claims approximate 33.3% and the face

value of preference claims grossly exaggerates the ultimate actual exposure for the claims. 27. In this case, there are approximately $1.6 Billion in unsecured claims (per

Debtors Disclosure Statement). 28. Movant represents approximately $14 Million in face value preference claims.

This $14 Million amounts to 9/10ths of 1% of the total amount of unsecured claims in this case. 29. Issues relating to the potential recovery of 25% (the unsecured creditors share) of

66.7% (the net recovery) of 9/10ths of 1% (the amount represented by Movant) of valid unsecured claims simple cannot be determined to be adverse under the doctrine of de minimus non curat lex. 30. At most, defense of these preference claims will impact unsecured creditors

recovery by 1/10th of a penny on the dollar. But see, In re 3DFX Interactive, Inc., __ B.R. __, 2007 WL 1591881 (Bankr. N.D. Cal. 2007) ( no case law exists permitting representation of committee while defending preference actions). 31. The Court should not disqualify local counsel to the Committee, or force Movant

to defer joining Butzel over issues relating to, at most, a .001 percent recovery to unsecured creditors.

Conclusion: 32. Both Movant and Butzel are confident that, if Movant joins Butzel, it will not

negatively impact Butzels ability to serve either the Committee or the Clients. 33. This is particularly true in this case, as confirmation of the Plan has occurred, and,

in any event, Butzel serves only as local counsel to the Committee. 34. This is not a situation where Movant will be sitting across the courtroom from a

Butzel colleague, arguing opposite sides of the case. None of the Clients have the Committee as the adverse party on any matter, nor is the resolution of any of the Clients issues likely to negatively impact distributions to unsecured creditors in any meaningful manner. 35. Viewed from a common-sense approach, Butzel will not represent an adverse

interest if Movant joins the firm (together with the Clients).

WHEREFORE Movant requests that this Honorable Court enter its order in substantially the form of Exhibit A, which provides that if Movant were to join Butzel while representing the Clients, Butzel would not represent an adverse interest that would violate 11 U.S.C. 1103(b). LAW OFFICES OF MAX J. NEWMAN, P.C.

/s/ Max J. Newman______________________ By: Max J. Newman (P51483) 3000 Middlebury Ln. Bloomfield Hills, MI 48301 (248) 835-4746 Mnewman6025@earthlink.net DATED: July 19, 2007

UNITED STATES BANKRUPTCY COURT FOR THE EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION

In re:

Chapter 11

Collins & Aikman Corporation, et al. Debtors.

Case No. 05-55927 (Jointly Administered) Honorable Steven W. Rhodes

_________________________________/ ORDER GRANTING MOTION SEEKING DETERMINATION THAT BUTZEL, LONG, P.C., LOCAL COUNSEL FOR THE OFFICIAL UNSECURED CREDITORS COMMITTEE DOES NOT REPRESENT AN ADVERSE INTEREST IF MAX J. NEWMAN JOINS BUTZEL, LONG WHILE REPRESENTING CERTAIN PARTIES IN INTEREST TO THIS CASE AFTER CONFIRMATION OF DEBTORS PLAN OF LIQUIDATION The Court having reviewed Movants Motion Seeking Determination that Butzel, Long, P.C., Local Counsel For the Official Unsecured Creditors Committee Does Not Represent An Adverse Interest If Max J. Newman Joins Butzel, Long While Representing Certain Parties In Interest To This Case After Confirmation of Debtors Plan of Liquidation (the Motion) and finding good cause justifying entry of this Order; IT IS HEREBY ORDERED THAT if Max J. Newman joins Butzel, Long, P.C. while representing the Clients (as that term is defined in the Motion), Butzel, Long, P.C. will not be representing any other entity having an adverse interest in connection with the case as set forth in 11 U.S.C. 1103(b).