Big Burlington Shareholder Unhappy

Greensboro, NC, Feb. 27--A Burlington Industries shareholder, according to papers filed with the federal bankruptcy court, has asked the court to appoint a committee that would represent the company’s shareholders. The shareholder, Walker Rucker, owns at least 2.5 million of Burlington’s 53 million outstanding shares. Rucker says the company isn't representing shareholders adequately. He said the company’s shares would become worthless under the company's proposed reorganization plan, even though $203 million in equity may have existed when the company filed for Chapter 11 two years ago. A Burlington spokeswoman said there is no equity in the company for shareholders to recover. In November 2001, when Burlington filed for bankruptcy protection, it listed assets of $1.2 billion and liabilities of $1.1 billion. Earlier this month, the company proposed a reorganization plan based on a buyout deal with Berkshire Hathaway. Under the plan, Berkshire would acquire all of Burlington's equity for $579 million in cash. The plan is subject to any higher offers, which would be submitted through an auction process. Secured creditors under the plan would receive all of their claims, unsecured creditors between 34% and 35% of their claims. While it is common for committees to be appointed in Chapter 11 cases to represent unsecured creditors, committees are generally not formed to represent shareholders unless it appears there may be some equity in the company for recovery. Today, the court is scheduled to consider the auction rules put forward by Burlington as a part of its deal with Berkshire. Also under consideration by the court is the company's request to block competing reorganization plans from being filed by four months. The company's creditors committee led by WL Ross & Co., a private equity firm led by Wilbur Ross, opposes both requests. The firm had offered to finance a stand alone plan to reorganize Burlington. Burlington's deal with Berkshire permits it to continue to review and pursue the WL Ross proposal.

Related Topics:Shaw Industries Group, Inc.

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