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In re: COLLINS & AIKMAN CORPORATION, et al., Debtors.

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Chapter 11 Case No. 05-55927 (SWR) (Jointly Administered) Hon. Steven W. Rhodes

RESPONSE OF CITY OF EVART TO DEBTORS' THIRTEENTH OMNIBUS OBJECTION TO CLAIMS (LATE FILED CLAIMS) City of Evart ("Creditor"), by and through its undersigned counsel, files this Response to Debtors' Thirteenth Omnibus Objection to Claims (Late Filed Claims) (the "Objection"). In support thereof, Creditor respectfully represents as follows: 1. On May 17, 2005 (the "Petition Date"), the Debtors each filed voluntary petitions

for relief under Chapter 11 of the Bankruptcy Code. 2. The Debtors' cases have been jointly administered, and continue to be jointly

administered, pursuant to an Order of the Court on the Petition Date. 3. On November 22, 2005, this Court entered an order establishing January 11, 2006

as the deadline to file pre-petition claims. 4. On March 22, 2006, Creditor filed Claim Nos. 8370, 8371 and 8375, each in the

amount of $98,658.84, as general unsecured claims (the "Original Claims"). On May 2, 2006, Creditor filed Amended Claim Nos. 8398, 8399 and 8400, each in the same amount as the Unsecured Claims, to amend the status of the Original Claims as secured claims (the "Secured Claims").





The basis for the Secured Claims is the Municipal Water and Sewage System

Liens Act, M.C.L. 123.162 et seq. (the "Act"). The Act provides a municipality which operates a water distribution system a lien (the "Statutory Lien") to secure the collection of water rates, assessments, charges or rentals due for the use or consumption of water supplied to any premises. M.C.L. 123.162. The Statutory Lien is "effective immediately upon the distribution of the water . . . ." Id. Moreover, the Statutory Lien has priority over all other liens except taxes or special assessments "whether or not the other liens accrued or were recorded before the accrual of the water or sewage system lien created by this [A]ct." See M.C.L. 123.165. 6. Creditor is a "municipality" under the Act and operates a "water distribution

system." Creditor distributed water to the Debtors' facility located in Evart, Michigan (the "Evart Facility") prior to the Petition Date and continues to do so post-petition. As of the Petition Date, Creditor's charges for such use and consumption of water supplied to the Evart Facility totaled $98,658.84. As of December 29, 2006, such charges totaled $123,997.29. The entire amount of Creditor's charges for water supplied to the Evart Facility is fully secured by the Statutory Lien. 7. The Debtors filed the Objection on March 6, 2007 and listed the Secured Claims

on Exhibit B, alleging they were late filed. 8. To the extent that a lien secures a claim against a debtor that is not an allowed

secured claim, such lien is not void if such claim is not an allowed secured claim due only to the failure of a creditor to file a proof of such claim. See 11 U.S.C. 506(d)(2). Accordingly, in the event the Secured Claims are disallowed as late filed, the Statutory Lien securing the Secured Claims remains valid pursuant to Section 506 of the Bankruptcy Code.


Creditor objects to the Debtors' request to disallow the Secured Claims for the

limited purpose of preserving Creditor's rights and remedies under the Act and pursuant to the Statutory Lien under 506 of the Bankruptcy Code. WHEREFORE, City of Evart respectfully requests that the Court enter an Order (i) limiting the Debtors' request to disallow the Secured Claims (Claim Nos. 8398, 8399 and 8400) so as to clarify Creditor's rights and remedies under the Act and pursuant to the Statutory Lien are expressly preserved under 506 of the Bankruptcy Code; and (ii) granting such other and further relief as is just. Respectfully submitted, Dated: April 6, 2007 VARNUM, RIDDERING, SCHMIDT & HOWLETT LLP Attorneys for City of Evart


/s/ Mary Kay Shaver Mary Kay Shaver (P60411) 333 Bridge Street, N.W., Suite 1700 Grand Rapids, MI 49504 Telephone: (616) 336-6000 Facsimile: (616) 336-7000