Pillowtex probe OK’d

By Staff -- Home Textiles Today, 4/22/2005 12:23:00 PM

WILMINGTON, Del.—A federal bankruptcy court judge this morning authorized an investigation into now-defunct Pillowtex Corp.’s management and financial dealings, including the actions of former CEO David Perdue and a dozen current and former executives and directors.

The examination was sought by the company’s committee of unsecured creditors. Among other things, the probe seeks to uncover the relationship between Oak Tree Capital Management and Pillowtex during the 14-month period between the mill’s two bankruptcies, and whether the Oak Tree’s interests were accommodated before those of other creditors. The probe will also examine Pillowtex’s accounting, sales accrual, trade allowance and sales incentive programs, among other issues.

It will also seek to determine if Perdue had any conflicts of interest during his eight-month tenure as CEO, including whether he negotiated and received extra bonuses and perks at the same time he was negotiating for the CEO position at Dollar General.