Collins & Aikman

Background of the Company Collins and Aikman (C&A) was incorporated in 1891 with Charles Aikman as President and William Collins as Corporate Secretary and Treasurer. In the early years, they were considered specialists in heavy, upholstery-type materials as a retailer in home décor. By the early 1920’s, both original owners had sold out and the company began producing fabrics for the auto industry. Eighty years later, C&A was the largest supplier of seat fabrics, floor mats and convertible tops, and second largest of floor carpets and luggage compartment trim. Being in the auto industry, C&A had gone through lean, and even loss years, especially during the Depression. However, in the early 1940’s under the leadership of Willis McCollough, the company emphasized research and development and prided itself on taking care of its employees, as they were pioneer providers of health care and supporters of the 40 hour work week. Throughout the next 50 years, C&A enjoyed internal growth as well as acquired several of its suppliers. In 1994, they went public and were listed on the New York Stock Exchange. In 2001, Heartland Industrial Partners, a private equity firm, purchased a 60 percent stake in C&A for $260 million. With this infusion of cash, C&A announced several other large acquisitions, and stated that it was focused on global market share! Shortly after this time though, C&A had grown quickly, but had availed itself in varieties of debt financing, including $900 million in notes, term loans of $675 million accounts receivable securitization of $250 million. Growth in operations, pressure from the market place, a waning auto industry, and pressure from the bank to reach their covenant agreements, and investors need to reach their “numbers”, contributed to C&A and management making some unethical and fraudulent decisions.
Individuals and Titles Involved The Securities and Exchange Commission (SEC)