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Pillowtex Files Chapter 11 Shuts Down Operations

Pillowtex Files Chapter 11,Shuts Down OperationsLittle more than a year after emerging from bankruptcy protection under Chapter 11 of the US Bankruptcy Code, Pillowtex Corp. is again seeking Chapter 11 relief. This time, the Kannapolis, N.C.-based manufacturer of bed and bath textiles is calling it quits, having shuttered its 16 manufacturing and distribution facilities and terminated approximately 6,450 employees.Pillowtex has assigned GGST LLC, Charlotte, to sell its assets, which include plants, equipment and brands. GGST stated it intends to sell Pillowtex assets in a way that will allow for the continuation of operations when and where possible.Since emerging from bankruptcy in May 2002, we have worked diligently to attempt to restructure our operations and regain profitability, said Michael Gannaway, chairman and CEO, Pillowtex. He cited soft consumer demand, intense foreign competition, industry overcapacity and downward pricing pressures as obstructions to company profitability.Gannaway said Pillowtex explored various strategies, including continuing as a stand-alone company with strong brand strategies and global sourcing capabilities, or selling the business to a more financially sound company that would retain at least some of its workforce. In the end, these options proved infeasible. [C]losing our facilities and preparing for bankruptcy has emerged as our only viable course of action, he said.The US Department of Labor has approved $20.6 million in emergency aid to provide employment transition-related assistance and payment of qualified health insurance premiums for former Pillowtex workers in North Carolina. A $50,000 grant from Duke Energy Foundation, Charlotte, will provide assistance to former manufacturing workers, including textile workers, in North and South Carolina. September 2003




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