Collins & Aikman Corporation on Wednesday said its Canadian soft trim operations applied for creditor protection under the Companies' Creditors Arrangement Act (Canada) (CCAA) in the Ontario Superior Court of Justice.

The company's Canadian soft trim operations are comprised of Collins & Aikman Holdings Canada and Collins & Aikman Canada. The CCAA filing is a necessary step in finalising the previously announced sale of the soft trim business unit to International Automotive Components Group North America. (IAC NA).

"This CCAA filing is intended to facilitate efforts to finalise our proposed soft trim sale to IAC NA," said John Boken, Collins & Aikman's chief restructuring officer. "We expect to work closely with IAC NA, our customers, suppliers and employees, as well as the US and Canadian courts over the coming weeks to close the transaction. We look forward to completing this transition and giving our employees the opportunity to prosper under new ownership."

The sale transaction approval hearing is scheduled for 5 June.

In connection with the filing, Collins & Aikman sought and obtained orders staying creditors and other third parties from terminating agreements with the companies or otherwise taking enforcement steps.

Additionally, as part of the initial court order, Collins & Aikman Products obtained an order under section 18.6 of the CCAA recognising Products Co.'s Chapter 11 bankruptcy proceedings in the United States, which will provide it with a stay of proceedings in Canada.

Collins & Aikman's Canadian soft trim entities will continue operations during the CCAA proceedings under the leadership of their existing management team. Ernst & Young was appointed by the court as the monitor in the CCAA proceedings.