Joan Fabrics Assets to be Auctioned
June 4, 2007,
The assets of bankrupt former fabric powerhouse Joan Fabrics are scheduled to be sold at auction on June 26, according to an order filed by the U.S. Bankruptcy Court here.
Although Joan Fabrics and its Mastercraft business unit have vacated their space in High Point's Market Square Textile Tower, the Circa 1801 unit is still operating and will be exhibiting in its 407 W. High Avenue showroom during next week's Showtime fabric fair.
Joan has asked the bankruptcy court to allow incentive pay for Circa 1801 president John Lenox, vp Margaret Coffin and other executives to help ensure the unit remains viable and maintains its value during the sale.
Joan Fabrics, which came under the control of New York-based Carl Marks Advisory Group earlier this spring, filed for Chapter 11 bankruptcy on April 10, and announced it had obtained debtor-in-possession financing of more than $10 million.
Founded in 1932, Joan Fabrics operates four manufacturing facilities in North Carolina — weaving jacquard in Siler City and Connelly Springs; weaving velvet in Hickory; and finishing fabric in Cramerton. The company also weaves jacquard in Texel, Mexico at a factory in which it holds an 80% stake.
The company became the top fabric mill for decorative fabrics in 1997 when Joan Fabrics, headed by Elkin McCallum, acquired the Mastercraft division from Collins & Aikman (C&A) for $310 million, a move that propelled it into the No. 1 slot with total sales of about $500 million.
At the time of the Chapter 11 filing, Joan Fabrics said its 2006 sales, under competitive pressure from imports, were $124 million. Top creditors named then included Unifi, American Fibers and Yarns, and Valdese Manufacturing.
McCallum is among several former executives and directors of C&A being sued by that company, which filed Chapter 11 in 2005.
David Stockman, the former chairman and ceo of Collins & Aikman (and former Reagan White House staffer); along with 11 individuals including McCallum; Heartland Industrial Partners, Heartland Industrial Associates, Heartland Industrial Group; PriceWaterhouseCoopers LLP and KPMG LLP are being sued by Collins & Aikman Corp. and Collins & Aikman Products Co. as debtor in possession for certain alleged fraudulent activities involving "roundtrip transactions" and rebates that inflated the company's financial results in a period beginning 2001.
In March, Stockman and eight others including McCallum were cited for fraud in a civil suit by the Securities and Exchange Commission regarding transactions involving C&A.
The C&A action, filed May 16 in the U.S. District Court in New Castle, Del., cites the acquisition of Joan Automotive Fabrics from Joan Fabrics; the purchase of Southwest Laminates; the purchase of furniture looms; and the purchase of Dutton Yarns.
The suit alleges improper and manipulative accounting practices damaging to C&A.