Polartec A-B-C

John W. Altman, Robert E. Weissman Professor of Entrepreneurial Practice at Babson College and Margaret C. DePalma, PhD, Case Directors and Writers

Arthur M. Blank Center for Entrepreneurship,

© Babson College, 2003.


Aaron Feuerstein, the Chairman, President and CEO of the Malden Mills garment factory, one of the last remaining large textile mills in the United States, is dealt a tragic blow in 1995 when his factory burns to the ground. Three thousand workers are faced with unemployment but are rescued by Fuerstein who decides to pay the 3,000 employees their full salary for three months at a cost of $15million while he figures out how to rebuild the plant. Fuerstein receives a huge positive reaction from the press, the public and U.S. President William Clinton who invites him to his State of the Union address in 1996. By 1997, using $300 million in insurance money from the fire, Malden Mills reopens in a new building, which costs $430 million, next to his former factory. A few major orders from the U.S. military for Polartec® materials for their uniforms keep the company going for a few years but several major former customers never buy again from Malden Mills. This loss of sales and the additional debt burden for the new building resulted in the company declaring bankruptcy in November of 2001. Reorganization plans drawn up by a crisis management team call for a new management team which leaves Feuerstein out and begins plans to find cheaper labor in Asia. Fuerstein resists these changes and as the case closes he is in the process of raising money to buy the company back from its creditors—General Electric Corporation’s GE Capital Unit by June 30th,2003.

Location of the company: Lawrence, Massachusetts

Years spanned by the case: 1995 to 2003

Industry segments: manufacturing, textiles

Stage of the company: Mature to declining

Age of the entrepreneur: 70’s

Key Words: Manufacturing, textiles, philanthropy, social responsibility, bankruptcy, reorganization, unions


There is a 15 minute DVD available for this case from a 60 Minutes story about Feurerstein and Malden Mills. Please place orders through ecch.

Teaching Notes

A four page case teaching package, written by Professor John Altman, is available and suggests that this case be used in entrepreneurial ethics, strategy, and business law or family business courses. There is an extensive bibliography and the notes will be updated in 2004. Questions for the students for classroom discussion are also provided.