Pillowtex Files Plan for Reorganization

Pillow and blanket maker Pillowtex Corp. filed a bankruptcy plan that would allow the company to repay creditors and complete its reorganization.

Under the proposed recovery plan, all Pillowtex shares would be canceled and shareholders would get nothing for their investment. Once reorganized, the company will give new shares to its secured creditors. Unsecured creditors would receive a combination of new shares and stock options. Pillowtex would emerge from bankruptcy with about $200 million of debt.

The Dallas-based company filed for Chapter 11 protection in November 2000 in U.S. Bankruptcy Court in Delaware, citing more than $1.66 billion in assets and $1.4 billion in debt, including $400 million in bond debt.

Shares of Pillowtex, which reported $1.35 billion in fiscal 2000 sales, fell 1.3 cents to 5.5 cents in over-the-counter trading.