Greensboro, N.C.—Following an unfavorable ruling by the bankruptcy court, Berkshire Hathawy has terminated its agreement to purchase Burlington Industries. The two companies had announced on Feb. 11, a proposal in which Berkshire would pay Burlington’s creditors $579 million in cash to purchase the textile manufacturer from Chapter 11 ( FCNews, Feb. 17/14). Burlington is the parent company of Lees Carpets, while Berkshire’s holdings include Shaw Industries. “We’re sorry to have to terminate our offer,” said Warren Buffett, Berkshire’s chairman.

“We trust and admire the Burlington team and hope the company can emerge from bankruptcy debt free. Emergence from bankruptcy under a debt free structure will provide the best chance for the long-term survival of Burlington and allow the company to best fulfill its pension obligations to employees.” The termination came a day after a hearing was held in Burlingtion’s reorganization case to consider procedures to solicit alternatives to the Berkshire transaction. Though the court indicated its general approval for the procedures, it disapproved the break-up fee and certain other condition required by Berkshire to proceed as a “stalking horse” in the alternative bid process. And, even though the secured bank lenders were in support of this deal, the Official Com-mittee of Unsecured Credi-tors opposed the granting of the break-up fee, reportedly $14 million.

“It is unfortunate that Berskshire Hathaway’s break-up fee was not accepted by the court and the offer has been subsequently withdrawn by Berkshire,” said George Henderson III, Burlington’s chairman and CEO. “It was a firm cash offer that would have been a good outcome for the company, our employees and our creditors.” Despite the setback, Hend-erson remained optimistic. “The bankruptcy process is complex and consists of many steps. But the fact that there is so much interest in the company is a credit to our employees who have worked so hard to get us to this point.” With Berkshire’s offer now off the table, Burlington will once again have to figure out a way to emerge from Chapter 11, either by itself or through another acquisition offer. “We are please the court extended our period of exclusivity as part of this hearing,” Henderson noted. “We are reviewing our alternatives in light of these developments, including a process to solicit new proposals. We expect to advise the banckruptcy court of our thinking next week and intend to move the process forward in a positive and expeditious manner.”