Burlington Industries Disputes Holder's Object

Washington, DC, July 24--Textile company Burlington Industries Inc. is fighting an effort by a stockholder to investigate the company and its chief executive, saying the probe had "no valid purpose" and amounted to harassment, according to a Dow Jones report. Walker Rucker--a North Carolina investor who previously sought to establish a committee of stockholders in Burlington's Chapter 11 case--asked a court to compel the company to hand over documents and allow interviews with CEO George Henderson and a company representative. Rucker said he would look at whether any acts or conduct by Burlington's board or management would give rise to any lawsuits. Burlington called Rucker's proposed investigation an effort to disrupt its Chapter 11 case and "extort value for equity security holders," in its objection, filed Tuesday with the U.S. Bankruptcy Court in Wilmington, DE, and obtained by Dow Jones Newswires. The company also questioned Rucker's right to even seek the investigation or pursue derivative claims, because he is "out of the money" in the bankruptcy case. Burlington has said it plans to auction its assets Monday and doesn't expect any recovery for current common-stock holders from its bankruptcy estate. Rucker, who has reported owning about 4.5 million shares of Burlington, has been fighting for several months to try to gain some kind of payout for stockholders. He disagrees with the company's financial outlook, and says a study he commissioned shows Burlington's assets could produce an equity value of about $84 million, after the company pays creditors' claims. Rucker's request was filed under Bankruptcy Rule 2004, which provides for a company to be examined or produce documents related to its operations or financial condition or the administration of the bankruptcy case, subject to court approval. A hearing on the investigation is scheduled for July 31. In the motion requesting the investigation, filed earlier this month, Rucker said it would look into Burlington's relationships with its Nano-Tex LLC and Burlington Worldwide Ltd. affiliates and changes to the company's bank credit facility before it filed for Chapter 11 in November 2001. Rucker said previously that Burlington has substantially undervalued its Nano-Tex stake. When Burlington Industries filed for bankruptcy protection, it listed assets of $1.2 billion and liabilities of $1.1 billion. The company decided on the auction after its planned sale to Berkshire Hathaway Inc. for $579 million fell apart in February.

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