Burlington Shareholder Seeks Company Inquiry

Greensboro, NC, July 16--A shareholder wants the court overseeing Burlington Industries Inc.'s Chapter 11 case to allow an investigation into the company and Chief Executive George Henderson. Walker Rucker--who was turned back in his effort to establish an official committee of stockholders in the bankruptcy case--asked the U.S. Bankruptcy Court in Wilmington, DE, to direct Burlington to produce documents and make people, including Henderson, available for examination. In the motion requesting the probe, filed July 7 and obtained by Dow Jones Newswires, Rucker said the investigation 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 in the one-year period before it filed for Chapter 11 in November 2001. A hearing on the matter is scheduled for July 31, with objections due by July 24. 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. The motion said the examination of company representatives and Henderson will determine whether any acts or conduct by Burlington's board or management would give rise to claims or derivative actions that the company didn't disclose in regulatory filings or the disclosure statement outlining its reorganization plan. As reported, Burlington plans to auction its assets July 28 and has said it doesn't expect any recovery for those holding common stock from its bankruptcy estate. The company decided on the auction after its planned sale to Berkshire Hathaway Inc. for $579 million fell apart in February. 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 projections, saying Burlington is undervaluing its investment in Nano-Tex, a California joint venture that does research to improve textiles and that developed stain-resistance technology. He says Burlington's assets have enough value to produce a return for stockholders and commissioned an analysis that estimated that the company's equity value, after paying creditors' claims, would amount to about $84 million. Burlington said the projections are faulty and underestimate the claims against it. The bankruptcy court turned down Rucker's request for an equity panel in June, but he said he would continue to pursue other remedies to ensure a recovery for stockholders and was looking into transactions related to the Nano-Tex joint venture. When Burlington Industries filed for bankruptcy protection, it listed assets of $1.2 billion and liabilities of $1.1 billion.

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