Pillowtex Files for Bankruptcy Protection

The maker of household goods such as Cannon towels will put as many as 7,650 people out of work.
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Pillowtex

(PWTX)

, a major manufacturer of home products such as Cannon towels, has filed for Chapter 11 bankruptcy protection, putting 6,450 employees out of work, the company announced Wednesday.

Pillowtex operated 16 manufacturing and distribution facilities in the U.S. and Canada and employed approximately 7,650 people.

A staff of about 1,200 has been initially retained to assist with bankruptcy proceedings, shipping and warehousing, and accounting and human resources issues.

The company is expected to announce soon it will sell its brands, equipment and 13 of the plants for $56 million to private investors,

Reuters

reported, citing a source.

The Kannapolis, N.C., textile maker produces towels, sheets, rugs, blankets, pillows, comforters and bedroom and bath accessories. The company markets products under its own brand names, including Cannon, Fieldcrest, Royal Velvet and Charisma.

"Due to soft consumer demand, the intensity of foreign competition, industry overcapacity and downward pricing pressure in all of our categories, the company simply cannot operate profitably in the current environment and with our current business model,"

CEO Michael Gannaway said.

The Union of Needletrades, Indusrial and Textile Employees (UNITE)

issued a statement on the plant closing in the suburban Charlotte community.

"In communities across the nation, UNITE members who work at Pillowtex Corporation are struggling to make ends meet with layoffs, shorter work hours and persistent rumors of plant closings, liquidation, or sale of the company, UNITE President Bruce Raynor said in the statement. "Like the 735,000 textile and apparel workers who have lost their jobs since NAFTA was enacted nine years ago, they remain frustrated that their own government continues to pass trade legislation that undercuts their industry, the standards on their job, and their capacity to compete in the global market."

Pillowtex first had filed Chapter 11 in November 2002.