Shareholder’s Push For Burlington Equity Panel Den

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Shareholder’s Push For Burlington Equity Panel Den
Washington, DC, June 6--A Bankruptcy Court turned back a push from one of Burlington Industries Inc.'s largest shareholders to establish an equity committee in the textile company's Chapter 11 case. Walker Rucker, who filed the motion seeking the equity committee with the court, said that the court denied his request. Burlington Industries, its bank lenders, the U.S. Trustee's Office, and the company's unsecured creditors committee all had objected to Rucker's motion. Under the Bankruptcy Code, shareholders usually don't receive a recovery unless all other creditors are paid in full, and establishment of an equity committee in Chapter 11 cases is rare and generally at the discretion of the U.S. Trustee. Rucker's motion was his second attempt at an equity panel after the U.S. Trustee refused his request to appoint one in May. An attorney for Burlington Industries confirmed the U.S. Bankruptcy Court in Wilmington, Del., denied the motion, but wouldn't comment further. Rucker said that although his equity committee requests were rejected, he'll continue to pursue other remedies to ensure a recovery for stockholders in the case. He said he is looking into transactions related to Burlington's Nano-Tex LLC joint venture, but declined to elaborate further. In previous filings with the court and mailings to other stockholders, Rucker has said that Burlington may be substantially undervaluing its investment in Nano-Tex, a California company that does research to improve textiles and that developed stain-resistance technology. Rucker owns more than 4.5 million shares of Burlington Industries, court papers said, and maintains that Burlington Industries' assets have enough value to produce a return for stockholders. An analysis by Water Tower Capital LLC of Chicago commissioned by Rucker estimated the company's equity value after paying creditors' claims would amount to $84 million. The analysis estimated the company's enterprise value at $770 million. In its objection to Rucker's request, Burlington Industries said the projections are faulty and underestimate the claims against the company, which it puts at about $815 million, excluding its underfunded pension plan. According to the U.S. Trustee, the equity panel would be too costly because Burlington would be paying its legal fees, and the panel would delay the case unnecessarily because shareholders aren't likely to see a return. As reported earlier, an agreement to sell Burlington Industries' assets to Berkshire Hathaway Inc. for $579 million fell through in March after a dispute over breakup fees. The company is seeking other bids and plans an auction for July 21. Burlington Industries filed for bankruptcy protection in November 2001, listing assets of $1.2 billion and liabilities of $1.1 billion.


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