Collins & Aikman files for creditor protection

Bankrupt Southfield, Mich.-based automotive parts supplier Collins & Aikman Corporation has applied for creditor protection under the Companies’ Creditors Arrangement Act (CCAA) for its Canadian plastics operations. The company said that its filing with the Ontario Superior Court of Justice was a “necessary step” in its restructuring efforts.

“This CCAA filling will allow the company to complete any potential sale transactions involving our Canadian plastics operation,” said C&As chief restructuring officer John Boken in a press release. “Similar to our previous filing involving our soft trim operations, we expect to work closely with our customers, suppliers and employees, as well as the US and Canadian courts to complete our restructuring efforts.”

C&A declared Chapter 11 bankruptcy in 2005, and is currently liquidating assets and ending operations. The company also sought and obtained orders that stop creditors and other third parties from terminating agreements or taking enforcement steps.

The Canadian plastics facilities will continue their day-to-day operations under the existing management team in the interim.

Approximately 350 workers in Port Hope and 150 workers in Mississauga walked off the job in June, frustrated by the inaction over plant closure details. C&A’s Canadian soft trim operations were placed under CCAA protection in May, and the United Steelworkers union wanted to ensure that the employees at the two facilities would still receive severance pay if they met a similar fate.

“These working people have given years of service to this company and, due to no fault of their own, are facing possible unemployment,” said USW assistant to the director Marie Kelly at the time of walkout. “They deserve to know that the company is capable of sitting down and bargaining a fair deal in the event of closures at these two plants.”

The workers returned to their jobs the following morning a settlement secured full severance pay with an $11.5 million escrow fund in the event of a plant closure.