Chargeback fight escalates; May added

Felgner, Brent
November 2003
Home Textiles Today;11/10/2003, Vol. 25 Issue 11, p1
Trade Publication
Pillowtex Corp. is battling chargeback claims and filed suit in federal bankruptcy court in Delaware to collect more than $9 million in outstanding bills and "unsubstantiated deductions" it claims are owed by May Co. Inc., Target Corp. and Mervyn's Department Stores. It is noted that Target Corp., including Marshall Field's, and Mervyn's earlier filed chargeback claims with the court seeking nearly $2.5 million in claims and deductions from outstanding invoices. The retailers claimed they suffered "considerable hardships" resulting from Pillowtex's "unscheduled" bankruptcy. In response, Pillowtex countered that the claims were "completely without basis in fact or law." The bankrupt former mill currently exists as little more than an entity on paper. Most of its remaining assets passed to GGST LLC in the sale closing of an earlier auction. Moreover, the court has previously recognized "that the recoupment doctrine presupposes that the debtor has breached a legally enforceable obligation to a creditor," the filing stated. A hearing is scheduled before chief bankruptcy court judge Peter J. Walsh on December 8, 2003. But the date is problematic, since under the bankruptcy law a motion for relief from the automatic stay is granted by default where there is no decision within 30 days of the motion's filing.


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