Delta Woodside Industries, Inc. Announce Filing of Petition under Chapter 11 of the U.S. Bankruptcy Code

Business Wire, Oct 13, 2006

FOUNTAIN INN, S.C. -- Delta Woodside Industries, Inc. (OTCBB: DLWI), its wholly-owned subsidiary Delta Mills, Inc., and Delta Mills Marketing, Inc., the wholly owned subsidiary of Delta Mills, today filed voluntary petitions for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware.

The companies are operating as debtors-in-possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code, and the directors and officers of each of the companies are expected to continue to oversee the operations of their respective company, subject to supervision and orders of the Bankruptcy Court for matters outside the ordinary course of business.

The companies intend to proceed immediately after filing the bankruptcy petition with an orderly wind-down of their operations designed to result in liquidation and distribution to creditors. The companies have reached an agreement with Delta Mills' credit facility lender GMAC to provide debtor-in-possession financing, subject to the approval of the Bankruptcy Court, which the companies believe they will receive, though there can be no assurance to this effect. As part of an orderly wind-down process, Delta Mills intends to fill most existing orders from its customers and to continue to operate its Beattie plant for a period of several weeks and its Delta 3 finishing plant for a longer period.

The Companies intend to petition the Bankruptcy Court to permit them to solicit bids over approximately a ten day period for a sale of most of the assets of the Companies as a going concern under Section 363 of the Bankruptcy Code. Any bid accepted by the Companies would be subject to Bankruptcy Court approval. There can be no assurance that the Bankruptcy Court will authorize the auction, that the Companies will receive any bids that they deem in the best interest of the estates of the Companies and their creditors as a whole or that the Bankruptcy Court would approve any bid accepted by the Companies.

Prior to filing their bankruptcy petitions, the Companies were negotiating a potential sale of a majority of their assets as a going concern to a potential acquirer; however, the parties were unable to agree on terms that the Companies' Boards of Directors believed were in the best interest of the Companies and their creditors as a whole, and negotiations were terminated shortly before the Companies filed their bankruptcy petitions.

Delta Woodside has filed a Current Report on Form 8-K with the U.S. Securities and Exchange Commission providing additional details, which is publicly available on the SEC's web site at www.sec.gov.

Delta Woodside Industries, Inc. is headquartered in Greenville, South Carolina. Through its wholly-owned subsidiary, Delta Mills, it manufactures and sells textile products for the apparel industry. The Company employs about 600 people and operates two plants located in South Carolina.