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UNITED STATES BANKRUPTCY COURTEASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION------------------------------------------------------------xIn re Chapter 11

COLLINS & AIKMAN CORPORATION, et al., Case No. 05-55927 (SWR)(Jointly Administered)

Debtors. Hon. Steven W. Rhodes

-------------------------------------------------------------xCOLLINS & AIKMAN PRODUCTS CO.and COLLINS & AIKMAN AUTOMOTIVEEXTERIORS, INC.

Plaintiff, Adv. Pro. No. 07-5718 (SWR)

- against -

EMHART TEKNOLOGIES, INC.,

Defendant.------------------------------------------------------------x

DEBTORS' MOTION TO APPROVE SETTLEMENT AND COMPROMISE OF

CLAIMS WITH RESPECT TO EMHART TEKNOLOGIES, INC.

The above-captioned debtors Collins & Aikman Products Co. and Collins & Aikman

Automotive Exteriors, Inc. (the Debtors) Motion to Approve Settlement and Compromise of

Claims With Respect To Emhart Teknologies, Inc. (the Motion), respectfully state as follows:

INTRODUCTION

1. By this Motion, the Debtors request authority to settle and compromise certainclaims the Debtors have against Emhart Teknologies, Inc. (the Defendant), and requests that

the Court enter an Order in the form annexed hereto as Exhibit A. If the Motion is granted, the

Debtors will compromise an alleged $101,378.00 claim against the Defendant for $91,240.00

and the parties will exchange mutual releases with respect to claims based on the post-petition

payments referred to in the Complaint.

0W[;(!8%E0555927080124000000000005

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JURISDICTION

2. The Court has jurisdiction over this matter pursuant to 28 U.S.C. 1334. Thismatter is a core proceeding within the meaning of 28 U.S.C. 157(b)(2).

3. Venue is proper pursuant to 28 U.S.C. 1408 and 1409.BACKGROUND

4. On May 17, 2005 (the Petition Date), the Debtors filed voluntary petitions forrelief (collectively, the Chapter 11 Cases) under chapter 11 of the Bankruptcy Code, 11 U.S.C.

101-1330 (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. The Debtors cases have been consolidated for procedural purposes only and

are being jointly administered pursuant to Rule 1015(b) of the Federal Rules of Bankruptcy

Procedure (as amended, the Bankruptcy Rules). No trustee or examiner has been appointed in

any of the Chapter 11 Cases.

5. On May 24, 2005, the United States Trustee appointed an official committee ofunsecured creditors pursuant to section 1102 of the Bankruptcy Code (the Committee).

6. Prior to and subsequent to the Petition Date, the Defendant allegedly providedcertain services, materials and/or equipment to the Debtors at the Debtors' Morristown, Indiana

manufacturing plant.

7. On or about May 17, 2007, the Debtors commenced the above-captionedadversary proceeding to recover $101,378.00 of alleged post-petition overpayments (the

Action).

8. The Defendant disputed part of the Debtors claim and the parties haveendeavored to reconcile their respective books and records. As a result of such reconciliation,

the parties now agree to settle this action for $91,240.00.

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14. Settlements are generally favored by the law. In re Dow Coming Corp., 198 B.R.214, 221 (Bankr. E.D. Mich. 1996). The benchmark for determining the propriety of a

bankruptcy settlement is whether the settlement is in the best interests of the estate. In re Lee

Way Holding Corp., 120 B.R. 881, 890 (Bankr. S.D. Ohio 1990). In considering whether to

approve a settlement as in the best interest of the debtor's bankruptcy estate, a bankruptcy court

should consider, among other things: (i) the probability of the party's success in the litigation;

(ii) the complexity of the litigation; and (iii) the litigation's expense, inconvenience and delay.

Protective Committee for Independent Stockholders of TMT Trailer Ferry, Inc. v. Anderson, 390

U.S. 414 (1968); Matter of Energy Cooperative, Inc., 866 F.2d 1921 (7

th

Cir. 1989); In re Lee

Way Holding Corp., supra.

15. A bankruptcy court should approve a proposed settlement if it is fair and equitableand unless it falls below the lowest point in the range of reasonableness. In re Dow Corning,

198 B.R. 214, 222 (Bankr. E.D. Mich. 1996); see also, In re New Concept Housing, Inc., 951

F.2d 932, 938 (8th Cir. 1991).

16. Giving appropriate consideration to the above factors, the risk to the Debtors, thecomplexity of the issues and the other risks inherent in litigation and weighing the expenses

which the Debtors would necessarily incur in further prosecuting these claims through trial, and

the delay and inconvenience which would be involved therewith, the Debtors believe that the

Settlement is in the best interest of the Debtors' Estate.

REQUEST FOR HEARING

17. The Debtors respectfully request that the Court schedule a Hearing on this matteron an existing omnibus hearing date in the Chapter 11 Case.

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NOTICE

18. Notice of this Motion has been given to the Core Group and Affected Parties asrequired by the Case Management Procedures. In light of the nature of the relief requested, the

Debtor submits that no further notice is required.

NO PRIOR REQUEST

19. No prior motion for the relief requested herein has been made to this or any othercourt.

WHEREFORE, the Debtors respectfully request that this Court approve the Settlement

Agreement and enter the proposed Order attached hereto as Exhibit A and grant to the Debtors

such other and further relief as is just and appropriate in the circumstances.

Dated: Uniondale, New YorkJanuary 24, 2008 ROSEN SLOME MARDER LLP

By: /s/ Lon J. SeidmanAlan E. MarderLon J. Seidman

333 Earle Ovington BoulevardSuite 901Uniondale, New York 11553-3622(516) 227-1600

and

Boyle BurdettH. William Burdett, Jr., Esq.14950 East JeffersonSuite 200Grosse Pointe Park, MI 48230

Attorneys for Collins & Aikman Products Co. and

Collins & Aikman Automotive Exteriors, Inc.

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EXHIBIT A

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- against -


Defendant.------------------------------------------------------------x

ORDER GRANTING DEBTORS' MOTION TO APPROVE

SETTLEMENT AND COMPROMISE OF CLAIMS

WITH RESPECT TO EMHART TEKNOLOGIES, INC.

This matter having come before the Court on the Debtors' Motion to Approve

Settlement and Compromise of Claims With Respect to Emhart Teknologies, Inc. (the

Motion), which was filed and served as required by applicable rules; it appearing that good

cause exists for the relief requested in the Motion and that the settlement proposed by the

Debtors as to Emhart Teknologies, Inc. in Adversary Proceeding No. 07-5718 is fair,

reasonable, and in the best interest of the Debtors' Estates and their creditors; it appearing that

appropriate notice and opportunity for a hearing was given to all parties entitled to notice; no

party having filed or otherwise interposed any objection; and the Court being otherwise duly

advised in the premises:

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NOW THEREFORE, IT IS HEREBY ORDERED that:

1. The Motion is granted and approved in all respects, and the Debtors areauthorized to enter into the Settlement Agreement (as defined in the Motion).

2. The Settlement Agreement (as defined in the Motion), the terms of which areincorporated herein by reference, are hereby authorized and approved.

3. The Debtors are, or another appropriate Estate representative is, authorized toexecute any and all documents necessary to consummate the Settlement Agreement.

4. The Court shall retain jurisdiction to adjudicate any disputes relating to this orderor the settlement as set forth in the Motion.

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EXHIBIT B

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- against -


Defendant.------------------------------------------------------------x

SETTLEMENT AGREEMENTAND MUTUAL RELEASE

THIS SETTLEMENT AGREEMENT AND MUTUAL RELEASE (together, theSettlement Agreement) is made and entered into this __ day of January, 2008, by andbetween Collins & Aikman Products Co. and Collins & Aikman Automotive Exteriors,Inc., (collectively the Debtors), on the one hand, and Emhart Teknologies, Inc. (theDefendant), on the other.

WHEREAS, on May 17, 2005 (the Petition Date), the Debtors filed petitionsfor relief under Chapter 11 of the United States Bankruptcy Code, which are beingjointly administered and referenced as In re Collins & Aikman Corporation et al., CaseNo. 05-55927 (individually and collectively, the "Case"), currently pending before theUnited States Bankruptcy Court for the Eastern District of Michigan, Southern Division(the Bankruptcy Court);

WHEREAS, prior to and subsequent to the Petition Date, Defendant providedcertain services, materials and/or equipment to the Debtors;

WHEREAS, the Debtors commenced the above-captioned action (the Action),pursuant to 11 U.S.C. 549 and 550, to recover $101,378 of overpayments allegedlymade to the Defendant after the Petition Date;

WHEREAS, the Defendant disputes the Debtors claim;

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WHEREAS, the parties have agreed to settle this matter;

WHEREAS, the Debtors and Defendant have selected, and have had theopportunity to consult with, counselof their choice with respect to the SettlementAgreement;

WHEREAS, the Debtors and Defendant desire to avoid the uncertainties andexpense of litigation and to settle and compromise on the terms set forth below, withoutadmitting any liability therefor;

NOW,THEREFORE, in consideration of the foregoing and the mutual covenantsherein contained, and other good and valuable consideration, the receipt and sufficiencyof which are hereby acknowledged, the Debtors and Defendant, intending to be legallybound, hereby agree as follows:

1. RecitalsIncorporated. Therecitals and prefatory phrases and paragraphsset forth above are hereby incorporated in full, and made a part of thisSettlement Agreement.

2. Settlement Payment. Within 10 days of the date of entry of an orderapproving the Settlement Agreement, the Defendant shall deliver toDebtors counsel, Rosen Slome Marder LLP, a check, payable to RosenSlome Marder LLP as attorneys for the Debtors in the amount of$91,240.00 (the Settlement Amount). Promptly after entry of a finalorder approving the Settlement Agreement that has not been stayed,appealed or otherwise modified (the Order), Rosen Slome Marder LLPshall disburse the Settlement Amount to the Debtors and file a Stipulation

dismissing the Action.

3. Mutual Release. Upon entry of the Order and payment in full of theSettlement Amount, the Debtors, on the one hand, and Defendant, on theother, for themselves and on behalf of their respective agents, attorneys,employees, officers, directors, other representatives, affiliates, successorsand assigns including, but not limited to, any successor trustee(s) in theCase hereafter appointed, and in consideration of the releases set forthherein and in the case of Defendant, the payment of the SettlementAmount), and for other good and valuable consideration, the receipt andsufficiency of which is hereby acknowledged, do hereby fully and

forever release, acquit and discharge each other and each of their agents,attorneys, employees, officers, directors, other representatives, affiliates,successors and assigns, from any and all actions, causes of action,defenses, set offs and all other claims, to recover the post-petitiontransfers referred to in the complaint filed in the Action. The SettlementAgreement resolves the claims asserted in the Action and any otherclaims of post-petition overpayments made by any of the Plaintiffs to theDefendant. The parties expressly reserve all other claims against each

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other, including preference actions asserted by Plaintiff againstDefendant (as well as the defenses thereto available to Defendant). Inaddition, notwithstanding this Release and the settlement of the Action,this Settlement Agreement shall not be construed to release or affect inany way (1) Defendants claims for payment from parties other than

Plaintiff on account of tooling and equipment that is or was previouslyutilized in the manufacture of parts by the Plaintiff for its customers,including but not limited to Ford Motor Company and its affiliates, or (2)Defendants right, if any, to payment for goods and services supplied toPlaintiff after September 1, 2007, nor any defenses pertaining to suchgoods and services (such as breach of warranty, late delivery, etc)

4. Representations and Warranties. Each party acknowledges that it hasread this Settlement Agreement and has consulted counsel beforeexecuting same; each party has relied upon its own judgment and that ofits counsel in executing the Settlement Agreement and has not beeninduced by any representation, statement or act by any other party whichis not referred to in this instrument; each party enters into the SettlementAgreement with all requisite authority, freely and voluntarily, with fullknowledge of its significance; and the Settlement Agreement is in allrespects complete and final.

5. Compromise Agreement. The Settlement Agreement is a compromiseand settlement of claims and is not intended to be, nor shall it be construedas, an admission of liability or wrongdoing by any party hereto or anyother person or entity.

7. Amendment of Settlement Agreement. The Settlement Agreement shallnot be amended except by a writing signed by all of the parties hereto.

8. Approval and Jurisdiction. The Settlement Agreement is subject to andconditioned upon the approval of the compromise reflected herein by theBankruptcy Court under the procedure set forth under the Federal Rulesof Bankruptcy Procedure and is conditioned upon the Debtors receipt, infull, of the Settlement Payment. In the event that the Bankruptcy Courtdoes not approve the Settlement Agreement, then the SettlementAgreement shall be null and void. The Settlement Agreement shall beconstrued and governed by the laws of the State of Michigan, and theBankruptcy Court shall have jurisdiction over the Settlement Agreement

and the parties.

9. Binding Effect. The Settlement Agreement shall be binding upon andinure to the benefit of the parties hereto and their respective successors andassigns.

10. Entire Agreement. This Settlement Agreement constitutes the entireagreement of the parties hereto as to the subject matter hereof. Theundersigned acknowledge that there are no communications or oral

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understandings contrary, different, or which in any way restrict thisSettlement Agreement, and that all prior agreements or understandingswithin the scope of the subject matter of the Settlement Agreement are,upon the execution and delivery of the Settlement Agreement, superseded,null, and void.

11. Execution in Counterparts. The Settlement Agreement may be executedin one or more counterparts, each counterpart to be considered an originalportion of the Settlement Agreement. The signature page of anycounterpart may be detached therefrom without impairing the legal effectof the signature(s) thereon, provided such signature page is attached to anyother counterpart identical thereto except having additional signaturepage(s) executed by one or more of the other parties. Each of the partiesagrees that each of the other parties may rely upon the facsimile signatureof any party on the Settlement Agreement as constituting a dulyauthorized, irrevocable, actual, current delivery of the SettlementAgreement as fully as if the Settlement Agreement contained the originalink signature of the party or parties supplying a facsimile signature.

12. No Assignment. Each of the parties to the Settlement Agreementrepresents and warrants that no claim or cause of action that is the subjectof, or related to, the subject matter of the Settlement Agreement has beenassigned, transferred to, or resides in any other person or entity, whetherby agreement or operation of law or otherwise, including through anassignment or transfer pursuant to any right or claim of subrogation.

13. Authority. Each party hereto warrants and represents to the other that theexecution and performance of the Settlement Agreement by it has been

duly authorized such that the signatory hereto possesses all requisitepower and authority to bind the entity on whose behalf they execute theSettlement Agreement.

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IN WITNESS WHEREOF, the parties hereto, each by persons duly authorized,have executed the Settlement Agreement as of the day and year first above written.

COLLINS& AIKMAN PRODUCTS CO. andCOLLINS & AIKMAN AUTOMOTIVE

EXTERIORS, INC.

By: Rosen Slome Marder LLP,Its: Special counsel to Collins & Aikman

Products Co. and Collins & AikmanAutomotive Exteriors, Inc.


Dated: January 24, 2008

EMHART TEKNOLOGIES, INC.

By: /s/ Thomas D. RendaIts: Attorney

Dated: January 24, 2008

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Defendant.------------------------------------------------------------x

NOTICE OF DEBTORS' MOTION TO APPROVE SETTLEMENT

AND COMPROMISE OF CLAIMS WITH RESPECT TO

EMHART TEKNOLOGIES, INC

Plaintiffs Collins & Aikman Products Co. and Collins & Aikman Automotive

Exteriors, Inc. have filed papers with this court to approve the settlement and compromise of

claims asserted in the above-referenced action against Emhart Teknologies, Inc. (the Motion)

Your rights may be affected. You should read these papers carefully and

discuss them with your attorney, if you have one in this bankruptcy case. (If you do not

have an attorney, you may wish to consult one).

If you do not want the court to grant the requested relief, or if you want the court

to consider your views on the above Motion, within 15 days, you or your attorney must:

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1. File with the court a written response or an answer, explaining yourposition at:

United States Bankruptcy Court

211 W. Fort Street, Suite 2100Detroit, MI 48226

If you mail your response to the court for filing, you must mail it early enough so

the court will receive it on or before the date stated above.

You must also mail a copy to:

THOMAS D. RENDAAttorney for Defendant

Miles and Stockbridge P.C.11 North Washington StreetSuite 700Rockville, Maryland 20850-4229

ALAN E. MARDERAttorney for Plaintiffs

Rosen Slome Marder LLP333 Earle Ovington Blvd., Suite 901Uniondale, New York 11553-3622

BOYLE BURDETT14950 East JeffersonSuite 200Grosse Pointe Park, MI 48230

2. If a response or answer1 is timely filed and served, the Clerk will schedulea hearing on the Motion and you will be served with a notice of the date, time and location of the

hearing.

1 Response or answer must comply with F.R. Civ. P. 8(b), (c) and (e).

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If you or your attorney do not take these steps, the court may decide that you do

not oppose the relief sought in the Motion and may enter an order granting that relief.

Dated: Uniondale, New York

January 24, 2008 ROSEN SLOME MARDER LLP


333 Earle Ovington BoulevardSuite 901Uniondale, New York 11553-3622

(516) 227-1600

And

Boyle BurdettH. William Burdett, Jr., Esq.14950 East JeffersonSuite 200Grosse Pointe Park, MI 48230

Attorneys for Plaintiffs Collins & Aikman ProductsCo. and Collins & Aikman Automotive Exteriors,Inc.

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Defendant.------------------------------------------------------------x

CERTIFICATE OF SERVICE

I, Lon J. Seidman, hereby certify on this 24th day of January, 2008, I caused a true and

correct copy of the Notice Of Debtors' Motion To Approve Sett lementAnd Compromise Of Claims With

Respect To Emhart Teknologies, Inc. and Debtors' Motion To Approve Settlement And Compromise Of

Claims With Respect To Emhart Teknologies, Inc. to be served by regular U.S. mail, postage prepaid to

the entities listed on the attached Service List.

/s/ Lon J. SeidmanLon J. Seidman

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Service List

Miles and Stockbridge P.C.11 North Washington StreetSuite 700Rockville, Maryland 20850-4229

Attn: Thomas D. Renda, Esq.

Dykema Gossett PLLCSuite 30039577 Woodward AvenueBloomfield Hills, MI 48304Attn: Brendan G. Best

Akin Gump Strauss Hauer & Feld LLP590 Madison AvenueNew York, New York 10022Attn: Michael S. Stamper

Philip C. Dublin

Butzel Long PC41000 Woodward Avenue Ste. WestBloomfield Hills, MI 48304-5178Attn: Thomas B. Radom

Dykema Gossett PLLC400 Renaissance CenterDetroit, MI 48243Attn: Ronald Rose

Brendan Best

Simpson Thacher & Bartlett LLP425 Lexington AvenueNew York, New York 10017-3954Attn: Peter Pantaleo

Erin CaseyAlice Eaton

Office of the United States Trustee211 W. Fort Street, Suite 700Detroit, MI 48226Attn: Stephen E. Spence

Wachtell Lipton Rosen & Katz51 W. 52nd StreetNew York, New York 10019Attn: Hal Novikoff, Esq.

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