NEW YORK — Another snag may extend Burlington Industries Inc.’s trip through bankruptcy.
Greensboro industrialist Walker Rucker, who holds Burlington shares, has asked the U.S. Bankruptcy Court in Wilmington, Del., to investigate the conduct of Burlington and its chairman and chief executive, George W. Henderson.
A Burlington spokeswoman described the filing as part of a “harassment campaign” by Rucker.
The motion requesting the investigation, which was filed with the court July 7, calls for a deeper look into the creation of the Greensboro, N.C.-based mill’s Nano-Tex and Burlington Worldwide operations, as well as any changes to the company’s credit agreements prior to seeking Chapter 11 protection.
Previously, Rucker had sought to establish a committee of shareholders, similar to the traditional creditors’ committee, to influence the bankruptcy proceedings.
The intent, according to the motion, is to “investigate whether any acts or conduct by the debtor’s board of directors of management give rise to claims or causes or action…that have not been identified or disclosed in the debtor’s schedules or disclosure statement.”
The motion makes no accusations of wrongdoing. It calls for a July 31 hearing on the matter.
As reported, bids for the bankrupt company are due Monday and Burlington had planned to choose and reveal a winning bid by the month’s end.
According to press reports, Rucker holds about 4.5 million shares of Burlington’s common stock, which would give him a stake of roughly 8 percent of the company. For the past few months, Rucker has been campaigning to ensure that Burlington shareholders get some form of payout or equity when the mill emerges from bankruptcy.
Often, in Chapter 11 cases, shareholders holdings are wiped out or greatly reduced, with a company’s creditors receiving most of the compensation.
“We have discussed with Mr. Rucker that the company does not have the authority to reimburse his losses,” said the Burlington spokeswoman, who noted that Rucker acquired most of his stake in Burlington after it filed for bankruptcy. “We are bound by the bankruptcy laws, which require secured and unsecured creditors to be paid in full before shareholders receive any recovery.”Rucker’s assistant said Wednesday he was traveling and could not be reached for comment.
Nano-Tex, which develops and licenses nanotechnology performance enhancements for fabrics, and Burlington WorldWide, a Hong Kong-based unit that sources fabrics from foreign mills, were not included in Burlington’s Chapter 11 filing. Emeryville, Calif.-based Nano-Tex in particular has been cited by industry sources as a promising venture for Burlington and is something of a pet project of Henderson’s.
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