PLUMA INC, 8-K, 1999-12-01

PLUMA INC
8-K, 1999-12-01
KNIT OUTERWEAR MILLS

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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): Report Filed December 1,
1999; Date of earliest event reported (Order Confirming Debtor's Plan of
Liquidation as Modified) November 20, 1999

PLUMA, INC.

(Exact name of Registrant as specified in Charter)

North Carolina 333-18755 56-1541893

(State of (Commission File (IRS Employer
incorporation) Number) Identification No.)

801 Fieldcrest Road
Eden, North Carolina 27288-3632
(Address of principal executive offices) (Zip Code)

(540) 635-4000
(Registrant's telephone number, including area code)

1
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Item 3: Bankruptcy or Receivership

On November 20, 1999 an Order confirming a modified Plan of Liquidation
of Pluma, Inc. was entered by the United States Bankruptcy Court for the Middle
District of North Carolina. The Plan provides for the orderly liquidation of the
assets of the Company with the proceeds being distributed to creditors generally
in accordance with the priority of distribution rules established in the
Bankruptcy Code. The Bank Group, consisting of Bank of America, Centura Bank,
Suntrust Bank, Atlanta, Crestar Bank, and Fleet Bank, N.A., holds uncontested
liens on substantially all of the Company's assets and will receive the net
proceeds of all asset sales. Under the Plan, however, the Bank Group has agreed
to "carve out" the sum of $750,000.00 to be placed in a "Creditors Fund" to be
used primarily for the benefit of general unsecured creditors.

The Plan anticipates that after the liquidation of all estate assets,
the Bank Group will be left with a deficiency claim in the approximate amount of
$50.0 million. The Plan further anticipates that general unsecured creditors
(exclusive of the Bank Group deficiency claim) will receive an aggregate
distribution of between five and fifteen percent of the amount of their
respective allowed claims. Under the Plan of Liquidation all allowed general
unsecured claims (approximately $15.0 million) and the Bank Group deficiency
claim must be paid in full prior to their being any distribution to
shareholders. Consequently, it is most unlikely that shareholders will receive
any distribution in this case.

2.1 Debtor'S Plan of Liquidation
2.2 Debtor's Disclosure Statement
2.3 Debtor's Second Modification to Plan of Liquidation
2.4 Debtor's Modification to Disclosure Statement
2.5 Debtor's Modified Disclosure Statement
2.6 Debtor's Modified Plan of Liquidation
2.7 Order Confirming Debtor's Plan of Liquidation as Modified,
entered November 20, 1999

2
<PAGE>

Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

PLUMA, INC.

By: /s/ John Wigodsky
--------------------------------------
John Wigodsky
President and Chief Executive Officer

Dated: December 1, 1999

EXHIBIT 2.1

UNITED STATES BANKRUPTCY COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
GREENSBORO DIVISION

IN RE: )
)
PLUMA, INC., )CASE NUMBER B-99-11104C-11G
)
DEBTOR.

- --------------------------------------------------------------------------------

DEBTOR'S PLAN OF LIQUIDATION

SEPTEMBER 24, 1999

- --------------------------------------------------------------------------------

R. Bradford Leggett
C. Edwin Allman, III
M. Joseph Allman
ALLMAN SPRY LEGGETT & CRUMPLER, P.A.
380 Knollwood Street, Suite 700
Post Office Drawer 5129
Winston-Salem, NC 27113-5129
Telephone: (336) 722-2300
Facsimile: (336) 722-8720
Counsel for the Debtor

============================================================

<PAGE>
TABLE OF CONTENTS

ARTICLE I...............................................................1
SUMMARY OF PLAN................................................1

ARTICLE II..............................................................2
DEFINITIONS....................................................2
2.1 Administrative Expense.......................3
2.2 Agent .......................................3
2.3 Allowed .....................................3
2.4 Ballot ......................................4
2.5 Bank Group ..................................4
2.6 Bank Group Representative ...................4
2.7 Bankruptcy Administrator ....................4
2.8 Bankruptcy Causes of Action .................4
2.9 Bankruptcy Code .............................4
2.10 Bankruptcy Court ............................4
2.11 Bankruptcy Rules ............................5
2.12 Business Day ................................5
2.13 Carve Out ...................................5
2.14 Chapter 11 ..................................5
2.15 Chapter 11 Case .............................5
2.16 Claim .......................................5
2.17 Class .......................................5
2.18 Committee ...................................5
2.19 Committee Expense Fund.......................5
2.20 Company .....................................6
2.21 Confirmation ................................6
2.22 Confirmation Order ..........................6
2.23 Creditor ....................................6
2.24 Creditors' Fund .............................6
2.25 Debtor ......................................6
2.26 DIP Account..................................6
2.27 DIP Loan.....................................6
2.28 Disclosure Statement ........................7
2.29 Disputed Claim ..............................7
2.30 Effective Date ..............................7
2.31 Employee Wage or Benefit Claim ..............7
2.32 Entity ......................................7
2.33 Estate Property .............................7

<PAGE>
2.34 Filing Date .................................7
2.35 Final Claims Resolution Order ...............8
2.36 General Unsecured Claim .....................8
2.37 Impaired Claims .............................8
2.38 Insider .....................................8
2.39 Interest ....................................8
2.40 Liquidation .................................8
2.41 Liquidation Budget ..........................8
2.42 Liquidation Term ............................9
2.43 Net Proceeds ................................9
2.44 Plan ........................................9
2.45 Preference Claim ............................9
2.46 Priority Claim ..............................9
2.47 Recovery Actions ...........................10
2.48 Secured Claim ..............................10
2.49 Stock of Pluma, Inc. .......................10
2.50 Tax Claims .................................10
2.51 Unencumbered Causes of Action...............10
2.52 Unsecured Claim ............................10
2.53 Unsecured Creditor .........................10
2.54 Unsecured Creditors Committee ..............10

ARTICLE III ...........................................................11
CLASSIFICATION, IMPAIRMENT AND TREATMENT OF
CLAIMS AND INTERESTS .........................................11
3.1 Class 1 - Administrative Expenses ..........11
3.1a Classification ...................11
3.1b Impairment ........................11
3.1c Treatment .........................11
3.2 Class 2 - Wage and Benefit Claims ..........12
3.2a Classification ....................12
3.2b Impairment ........................12
3.2c Treatment .........................12
3.3 Class 3 - Tax Claims .......................12
3.3a Classification ....................12
3.3b Impairment ........................12
3.3c Treatment .........................12
3.4 Class 4 - Gaston County Dye and Finishing
Secured Claim ....................13
3.4a Classification ....................13
3.4b Impairment ........................13
3.4c Treatment .........................13

<PAGE>

3.5 Class 5 - Secured Claim of Bank Group.......13
3.5a Classification ....................13
3.5b Impairment ........................13
3.5c Treatment .........................13
3.6 Class 6 - General Unsecured Claims .........14
3.6a Classification ....................14
3.6b Impairment ........................14
3.6c Treatment .........................14
3.7 Class 7 - Bank Group Deficiency Claim ......15
3.7a Classification ....................15
3.7b Impairment ........................15
3.7c Treatment .........................15
3.8 Class 8 - Shareholders......................15
3.8a Classification.....................15
3.8b Impairment.........................15
3.8c Treatment..........................15

ARTICLE IV ............................................................16
IMPLEMENTATION OF THE PLAN ...................................16
4.1 Generally ..................................16
4.2 Asset Sales ................................16
4.2a Sales of Personal Property ........16
4.2b Sales of Real Property ............17
4.3 Causes of Action ...........................18
4.3a Preference Claims .................18
4.4 Recovery Actions ...........................20
4.5 Funding ....................................20
4.5a Liquidation Budget ................20
4.5b Committee Expense Fund ............21
4.5c Creditors' Fund ...................22
4.6 Distributions ..............................23
4.6a Administrative Expenses ...........23
4.6b Post Confirmation Costs and
Expenses...........................23
4.6c Secured Tax Claims ................23
4.6d Priority Unsecured Claims .........24
4.6e Bank Group Secured Claim ..........24
4.6f Unsecured Creditor Claims .........24
4.6g Shareholder Interests .............25

ARTICLE V .............................................................25
ACCEPTANCE OR REJECTION OF THE PLAN ..........................25

<PAGE>

5.1 Separate Voting ............................25
5.2 Acceptance by Classes ......................25
5.3 Persons entitled to vote ...................25
5.4 Cram Down...................................26

ARTICLE VI ............................................................26
PROVISIONS CONCERNING UNDELIVERABLE DISTRIBUTIONS ............26
6.1 Undeliverable Distributions ................26

ARTICLE VII ...........................................................26
EXECUTORY CONTRACTS AND UNEXPIRED LEASES .....................26
7.1 Assumption and Rejection ...................26
7.2 Bar to Rejection Damages ...................27

ARTICLE VIII ..........................................................27
PROCEDURES FOR RESOLVING DISPUTED CLAIMS .....................27
8.1 Objections to Claim ........................27
8.2 Payments and Distributions with Respect
to Disputed Claims .........................28
8.3 Timing of Payments and Distributions
with Respect to Disputed Claims ............28
8.4 Retention and Enforcement of Rights ........28

ARTICLE IX ............................................................29
NO DISCHARGE, BANK GROUP RELEASE..............................29
9.1 No Discharge ...............................29
9.2 Bank Group Release..........................29

ARTICLE X .............................................................30
EFFECTUATION AND SUPERVISION OF PLAN .........................30
10.1 Retention of Jurisdiction ..................30

ARTICLE XI ............................................................32
MISCELLANEOUS PROVISIONS .....................................32
11.1 Reporting Requirements .....................32
11.2 Compliance with Tax Requirements ...........32
11.3 Binding Effect of Plan .....................32
11.4 Authorization of Corporate Action ..........32
11.5 Retention of Records........................33
11.6 Cancellation of Corporate Charter...........33
11.7 No Revesting of Estate Property.............33
11.8 Modification of This Plan...................33
<PAGE>

11.9 Captions....................................33
11.10 Method of Notice............................33
11.11 Reservation.................................34
11.12 Savings Clause..............................35

<PAGE>

ARTICLE I
SUMMARY OF PLAN

The Plan provides for the orderly liquidation of all of the assets of
Pluma, Inc. ("Pluma") and the distribution of the proceeds in a manner following
generally the priority of distribution set forth in the Bankruptcy Code, but
providing certain benefits to Unsecured Creditors which would not be available
in a Chapter 7 liquidation. The Plan recognizes that the reorganization of Pluma
and the continuation of its operations as a going concern is no longer feasible.
Furthermore, given the present state of the textile industry, the sale of Pluma
as a going concern, at least as currently configured, is not realistic. An
orderly liquidation thus provides the greatest method for maximizing the value
of Pluma's assets. Further, although the value of all estate assets is less than
the secured claim of the Bank Group, the Plan "carves out" $750,000.00 of Net
Proceeds from the sale of Estate Property and provides certain other benefits
and potential recoveries that would otherwise go, in whole or in part, to the
Bank Group and earmarks the same primarily for distribution to the class of
general Unsecured Creditors. The Carve Out effectively provides a significant
benefit to general Unsecured Creditors in excess of what they might otherwise
receive in a Chapter 7 liquidation. Accordingly, the Debtor believes that this
Plan represents the best alternative that is available to all Creditors in this
case.

Essentially the Plan provides for the sale of all Estate Property and
the distribution of the net proceeds of such sales to the Bank Group in
satisfaction of its Allowed Secured Claim after sufficient funding is set aside
for the matters contained in the Liquidation

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<PAGE>

Budget and for the Carve Out. In addition to potential distributions from the
sale of Estate Property, Unsecured Creditors will receive pro rata distributions
from the Creditors' Fund which, in addition to the Carve Out, will contain the
net proceeds of all Recovery Actions. While the ultimate recovery to Unsecured
Creditors is uncertain, the Debtor believes it reasonable to estimate that
Unsecured Creditors will receive as a dividend in this case between five to
fifteen percent (5 to 15%) of their respective Allowed Claims. All
Administrative Expense Claims and Priority Claims will be paid in full prior to
any distribution to general Unsecured Creditors. The Plan provides a mechanism
for the payment of liquidation and Administrative Expenses and further
establishes procedures for the sale of assets without the need for further
specific Court authorization, provided consents to such sales are duly obtained
from the Bank Group.

ARTICLE II

DEFINITIONS

The capitalized terms used in this Plan shall have the meanings set forth
in this Article II. Any term defined in the Bankruptcy Code or Bankruptcy Rules
and not otherwise defined in this Article II shall have the meaning set forth in
the Bankruptcy Code or Bankruptcy Rules. A reference to an "Article" or a
"Paragraph" refers to an Article or a Paragraph of the Plan. A reference to a
"Section" refers to a Section of the Bankruptcy Code. The rules of construction
set forth in Section 102 of the Bankruptcy Code shall apply in the
interpretation of the Plan.

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2.1 ADMINISTRATIVE EXPENSE: Any cost or expense of administration of
the Chapter 11 case allowable under Section 503(b) including, without
limitation, any such allowed items constituting (a) actual and necessary
post-petition costs and expenses of preserving and liquidating Estate Property
or operating the business of the Debtor inclusive of post-confirmation costs and
expenses, and the costs and expenses of administering this Chapter 11 case to a
conclusion, (b) post-petition costs and indebtedness or obligations duly and
validly incurred by the Debtor and (c) compensation or reimbursement of expenses
to professionals, to the extent allowed by the Bankruptcy Court under Section
330(a).
2.2 AGENT: Bank of America, N.A. as Agent for the Bank Group.

2.3 ALLOWED: With respect to Claims and Interests, (a) any Claim
against or Interest in the Debtor, proof of which was timely filed or by order
of the Bankruptcy Court was not required to be filed, or (b) any Claim or
Interest that has been, or hereafter is, listed in the schedules of liabilities
filed by the Debtor as liquidated in amount and not disputed or contingent, and,
in each such case in (a) and (b) above, as to which either (i) no objection to
the allowance thereof has been filed within the applicable period of limitation
fixed by the Plan, the Bankruptcy Code, the Bankruptcy Rules or the Bankruptcy
Court, or (ii) an objection has been filed and not withdrawn and the Claim or
Interest has been allowed by a Final Order (but only to the extent so allowed).
Unless otherwise expressly specified in the Plan, an Allowed Claim shall not
include post-petition interest on the principal amount of the Claim.

3
<PAGE>

2.4 BALLOT: The form or forms for voting on the Plan that will be
distributed to holders of Claims or Interests in Classes that are impaired under
the Plan and entitled to vote under Section 1126.

2.5 BANK GROUP: Collectively Bank of America, N.A., Centura Bank,
Suntrust Bank, Atlanta, Crestar Bank and Fleet Bank, N.A.

2.6 BANK GROUP REPRESENTATIVE: That individual or entity designated by
the Bank Group as having the authority to perform the functions of the Bank
Group Representative as provided for in this Plan.

2.7 BANKRUPTCY ADMINISTRATOR: The duly appointed Bankruptcy
Administrator, or an authorized representative of the Bankruptcy Administrator
for the Middle District of North Carolina.

2.8 BANKRUPTCY CAUSES OF ACTION: Any and all claims, rights and causes
of action created by the Bankruptcy Code in favor of the Debtor, including all
claims, rights and causes of action arising under any of the Sections 502, 510,
and 542 through 553, inclusive.

2.9 BANKRUPTCY CODE: Title 11 of the United States Code, as amended
from time to time, as applicable to the Chapter 11 Case.

2.10 BANKRUPTCY COURT: The United States Bankruptcy Court for the
Middle District of North Carolina, and any appellate court that exercises
jurisdiction over the Chapter 11 Case, also referred to herein as the "Court".

2.11 BANKRUPTCY RULES: The Federal Rules of Bankruptcy Procedure, as
amended from time to time, as applicable to the Chapter 11 Case.

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2.12 BUSINESS DAY: Any day other than a Saturday, Sunday or Legal
Holiday.

2.13 CARVE OUT: $750,000 of the Net Proceeds from the liquidation of
Estate Property that serves as collateral for the Bank Group Claim to be paid
into the Creditors' Fund. The Carve Out will be funded on the Effective Date.

2.14 CHAPTER 11: Chapter 11 of Title 11 of the United States Code.

2.15 CHAPTER 11 CASE: In re Pluma Inc., Case No. 99-11104-C-11G pending
in the Bankruptcy Court.

2.16 CLAIM: Any right to (a) payment to or from the Debtor, whether or
not such right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured
or unsecured, or (b) an equitable remedy for breach of performance if such
breach gives rise to a right to payment to or from the Debtor, whether or not
such right to an equitable remedy is reduced to judgment, fixed, contingent,
matured, unmatured, disputed, undisputed, secured or unsecured.

2.17 CLASS: Shall mean any one of the Classes of Claims or Interest
designated in Article III of the Plan.

2.18 COMMITTEE: The Unsecured Creditors Committee.

2.19 COMMITTEE EXPENSE FUND: The $50,000.00 fund established to
partially defray the post-Confirmation fees and expenses of Committee
professionals.

2.20 COMPANY: Pluma, Inc.

2.21 CONFIRMATION: Confirmation of this Plan by virtue of the entry of
the Confirmation Order.

5
<PAGE>

2.22 CONFIRMATION ORDER: The Order of the Bankruptcy Court confirming
the Plan.

2.23 CREDITOR: Any entity that is the holder of either a Claim against
the Debtor that arose on or before the Filing Date or a Claim against the
Debtor's estate of the types specified in Sections 502(g), 502(h) or 502(i).

2.24 CREDITORS' FUND: A separate, adequately insured, interest bearing
depository account administered by the Debtor into which is deposited (a) net
recoveries resulting from the prosecution or settlement, by or on behalf of the
Debtor, of Recovery Actions , (b) the Carve Out, and (c) Net Proceeds from the
disposition of Estate Property not otherwise subject to a lien in favor of the
Bank Group.

2.25 DEBTOR: Pluma, Inc., a Debtor in possession under Chapter 11.

2.26 DIP ACCOUNT: The Debtor in Possession bank account established
pursuant to Orders entered herein on May 14, 1999 and May 25, 1999.

2.27 DIP LOAN: The Debtor in Possession financing provided by the Bank
Group pursuant to Orders entered herein on June 23, 1999 and July 9, 1999, which
financing was repaid on August 27, 1999.

2.28 DISCLOSURE STATEMENT: The Disclosure Statement describing this
Plan, prepared in accordance with Section 1125 and approved by Order of the
Bankruptcy Court.

6
<PAGE>

whole or in part, has been filed or will be filed within the applicable
limitation period, and which objection has not been withdrawn, settled or
determined by a Final Order.

2.30 EFFECTIVE DATE: The date the Confirmation Order becomes a Final
Order.

2.31 EMPLOYEE WAGE OR BENEFIT CLAIM: An allowed Priority Claim asserted
under Section 507(a)(3) or (4).

2.32 ENTITY: Any individual, corporation, limited or general
partnership, joint venture, association, estate, entity, trust, trustee,
unincorporated organization, government, governmental unit, agency or political
subdivision thereof.

2.33 ESTATE PROPERTY: Shall mean all of the property of the Debtor.
Estate Property shall not revest upon entry of the Confirmation Order but shall
be liquidated in accordance with the terms and conditions of this Plan, under
and pursuant to the control and jurisdiction of the Bankruptcy Court.

2.34 FILING DATE: May 14, 1999, the date the Chapter 11 petition was
filed by the Debtor.

2.35 FINAL CLAIMS RESOLUTION ORDER: An order, ruling or judgment of the
Bankruptcy Court which is no longer subject to review, reversal, modification or
amendment by appeal or writ of certiorari, which determines that all Disputed
Claims have been determined and allowed or disallowed, as the case may be, and
sets forth a listing of all Allowed Unsecured Claims.

2.36 GENERAL UNSECURED CLAIM: Any Unsecured Claim other than an
Administrative Expense or a Priority Claim.

7
<PAGE>

2.37 IMPAIRED CLAIMS: The Claims in Classes 4, 5, 6 and 7. Generally,
Section 1124 of the Bankruptcy Code provides that a Class of Claims or Interests
is impaired under a plan if the plan alters the legal or equitable rights of the
claimants or interest holders in the class.

2.38 INSIDER: An individual or entity whose relationship to the Debtor
is described in Section 101(31), specifically including all former and present
officers and directors of the Debtor.

2.39 INTEREST: An equity interest evidenced by a share certificate in
Pluma, Inc.

2.40 LIQUIDATION: The sale of all assets of the Company following the
entry of the Confirmation Order.

2. 41 LIQUIDATION BUDGET: The operating budget prepared by the Debtor,
with the advice and counsel of the Bank Group, as may be modified from time to
time, and which is either approved by the Bank Group and filed with the Court as
part of this Plan or approved by the Court at the Confirmation Hearing.

2.42 LIQUIDATION TERM: The period beginning with the entry of the
Confirmation Order and ending with the final distribution of the proceeds from
the sale or transfer of all remaining Estate Property to holders of all Allowed
Creditor Claims and Interests in accordance with the priority established
herein.

8
<PAGE>

receivable and causes of action of the Estate not constituting Unencumbered
Causes of Action, gross collections less all direct collection costs and
expenses, including reasonable legal fees and expenses.

2.44 PLAN: This Chapter 11 Plan of Liquidation as it may be modified
from time to time.

2.45 PREFERENCE CLAIM: Avoidance actions based on Section 547 and
asserted as provided in Paragraph 4.3(a) of the Plan.

2.46 PRIORITY CLAIM: Any Claim, other than a Secured Claim, entitled to
a priority of distribution over the Claims of General Unsecured Creditors
pursuant to Sections 507 or 364.

2.47 RECOVERY ACTIONS: All actions, including Preference Claims,
asserted by or on behalf of the Debtor, for the recovery of money based on an
Unencumbered Cause of Action or a Bankruptcy Cause of Action.

2.48 SECURED CLAIM: Any Claim that is secured by Estate Property to the
extent such Claim is subject to allowance as a Secured Claim under Section
506(a).

2.49 STOCK OF PLUMA, INC.: The common stock of the Debtor at no par
value. There are currently 8,109,152 shares of such stock outstanding.

2.50 TAX CLAIMS: Any Claim by a federal, state or local taxing
authority, including a Claim for ad valorem taxes, entitled to priority pursuant
to Section 507(a)(7).

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<PAGE>

2. 51 UNENCUMBERED CAUSES OF ACTION: Any and all actions, claims,
demands and liabilities, whether known or unknown, in law, equity, or otherwise,
held by or against the Debtor not subject to a lien in favor of the Agent on
behalf of the Bank Group.

2.52 UNSECURED CLAIM: Any Claim that is not an Administrative Expense,
a Secured Claim or a Priority Claim.

2.53 UNSECURED CREDITOR: The holder of a General Unsecured Claim.

2.54 UNSECURED CREDITORS COMMITTEE: The Committee of Unsecured
Creditors appointed by Order of the Bankruptcy Court.

ARTICLE III
CLASSIFICATION, IMPAIRMENT AND TREATMENT OF
CLAIMS AND INTERESTS

3.1 CLASS 1 - ADMINISTRATIVE EXPENSES:
---------------------------------
A. CLASSIFICATION: Class 1 Claims consist of all claims
for Administrative Expenses.

B. IMPAIRMENT: Class 1 Claims are not impaired.

C. TREATMENT: Each holder of an Allowed Administrative Expense
shall receive the full amount of its Allowed Administrative Expense in
cash on the Effective Date or as soon thereafter as the same may be
determined and allowed;

<PAGE>
provided, however, that Administrative Expenses representing
post-petition liabilities incurred in the ordinary course of business
by the Debtor shall be paid in accordance with the terms and conditions
of the particular transactions relating to such liabilities and any
agreements relating thereto. Following Confirmation, the costs and
expenses of administering the Estate, as set forth in the Liquidation
Budget, will be paid when due from funds maintained by the Debtor or
from the Creditors' Fund (if outside the Liquidation Budget) In the
case of professionals, payments shall only be made in accordance with
applicable orders and procedures then in effect for the payment of
professional fees. It is the express purpose and intent of the Plan
that all reasonable costs and expenses of administering this case be
paid and appropriate provisions for such payment shall be made prior to
any distribution to Creditors from the Creditors' Fund.

3.2 CLASS 2 - WAGE AND BENEFIT CLAIMS:
---------------------------------

A. CLASSIFICATION: Class 2 Claims shall consist of all allowed
Employee Wage and Benefit Claims entitled to priority pursuant to
Sections 507(a)(3) and (4). To the extent any such Claims exist, Pluma
believes that they will not be significant.

B. IMPAIRMENT: Class 2 Claims are not impaired.

C. TREATMENT: Class 2 Claims shall be paid in full from
the Creditors' Fund, in cash on the later of the Effective Date or the
date which is twenty

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<PAGE>

business days after the date on which the Employee Wage or Benefit
Claim becomes an Allowed Claim.

3.3 CLASS 3 - TAX CLAIMS:
---------------------

A. CLASSIFICATION: Class 3 shall consist of Allowed Tax
Claims.

B. IMPAIRMENT: Class 3 Claims are not impaired.

C. TREATMENT: All Tax Claims secured by real estate shall be
paid in full in cash upon the sale of such real estate or within twelve
(12) months following the Effective Date, whichever first occurs. To
the extent other Tax Claims exist, they shall be paid in full from the
Creditors' Fund within thirty (30) days after such Claim becomes
Allowed.

3.4 CLASS 4 - GASTON COUNTY DYE AND FINISHING SECURED CLAIM:
-------------------------------------------------------

A. CLASSIFICATION: Class 4 shall consist of the Allowed
Secured Claim of Gaston County Dye and Finishing Company.

B. IMPAIRMENT: The Class 4 Claim is impaired.

C. TREATMENT: The Class 4 Claim will be satisfied
through the abandonment of the collateral securing the Class 4 Claim to
the Class 4 Claimant on the Effective Date, in full satisfaction of the
secured claim, without prejudice to the rights of the Class 4 Claim
holder to assert an unsecured deficiency claim for treatment under
Class 6. The collateral will be made available to the Class 4 Creditor
for thirty (30) days following the Effective Date in order for the
Class 4 creditor to

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take possession of the collateral. Any deficiency claim shall be filed
within thirty (30) days following the Effective Date.

3.5 CLASS 5 - SECURED CLAIM OF BANK GROUP:

A. CLASSIFICATION: Class 5 shall consist of pre-petition
Allowed Secured Claims of the Bank Group. The Class 5 Claim does not
include any claims relating to the DIP Loan.

B. IMPAIRMENT: Class 5 claims are impaired.

C. TREATMENT: The Allowed Class 5 Secured Claims of the Bank
Group shall be satisfied and fully discharged as follows:

The Bank Group shall receive the Net Proceeds from
the post-petition realization, sale or disposition of Estate
Property, exclusive of the Carve Out (which shall be deposited
into the Creditors' Fund on the Effective Date) and amounts
necessary to fund the Liquidation Budget (which shall remain
in the DIP Account). Following confirmation, the Net Proceeds
of sales shall be paid to the Bank Group upon the closing of
such sales. The Bank Group shall retain its liens on Estate
Property following Confirmation to the same extent that such
liens existed pre-Confirmation. The Bank Group distributions
above shall be limited to distributions from realizations on
assets which serve as collateral to the Bank Group Allowed
Secured Claim. The Bank Group deficiency claim shall be a
Class 7 Unsecured Claim.

3.6 CLASS 6 - GENERAL UNSECURED CLAIMS:
----------------------------------

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<PAGE>

A. CLASSIFICATION: Class 6 shall consist of the Allowed Claims
of General Unsecured Creditors, exclusive of the Bank Group deficiency
claim.

B. IMPAIRMENT: Class 6 Claims are impaired.

C. TREATMENT:.......Class 6 Creditors shall receive pro rata
distributions from the Creditor Fund, as provided in Article IV, until
all Estate assets have been fully liquidated and the proceeds
distributed to Creditors, or until their respective claims shall have
been paid in full, whichever first occurs.

3.7 CLASS 7 - BANK GROUP DEFICIENCY CLAIM:
-------------------------------------

A. CLASSIFICATION: Class 7 shall consist of the unsecured
deficiency claim of the Bank Group.

B. IMPAIRMENT: The Class 7 claim is impaired.

C. TREATMENT: The Class 7 claim will share, pro rata, with
Class 6 Creditors on all distributions from the Creditors' Fund
exclusive of and after taking account of distributions resulting from
the Carve Out and the recovery of Preference Claims. For distribution
and voting purposes, the Bank Group deficiency claim shall be allowed
in the amount of $50,000,000.00.

3.8 CLASS 8 - SHAREHOLDERS:
----------------------

A. CLASSIFICATION: Class 8 shall consist of the owners of the
Stock of Pluma, Inc.

B. IMPAIRMENT: Class 8 Interests are impaired.

14
<PAGE>

C. TREATMENT: Shareholders of Pluma shall retain their
respective equity interests and shall be entitled to pro-rata
distributions from the Creditor Fund after all Allowed Creditor Claims
have been paid in full and discharged. In light of the amount of Claims
which must be paid in full prior to any distribution to shareholders of
Pluma, it is very unlikely that such shareholders will receive any
distribution under the Plan.

ARTICLE IV

IMPLEMENTATION OF THE PLAN

4.1 GENERALLY: This Plan serves as the mechanism for the orderly
liquidation of all Estate Property in Pluma's bankruptcy case and provides for
the distribution of funds realized through the liquidation process to Creditors.
It does not appear that sufficient funds will be realized from the liquidation
to satisfy all Creditor Claims in full. Accordingly, the Plan provides for
distribution to shareholders of Pluma only after all Creditor Claims have been
satisfied. While the Debtor expects that the sale of the Debtor's real property
and tangible personal property will be accomplished within six months following
Confirmation, the final distribution to Creditors will need to await the
conclusion of any litigation by or against the Debtor and the Debtor's Estate.
The Plan does provide a mechanism, however, for an interim distribution to
general Unsecured Creditors, if circumstances warrant.

4.2 ASSET SALES: With respect to the sale of assets following
confirmation, the following procedures shall apply:

15
<PAGE>

A. SALES OF PERSONAL PROPERTY: In winding down its business
operations, the Debtor may continue to sell inventory in the ordinary
course of its business. The Debtor, with the consent of the Bank Group
Representative, shall be free to consummate sales of personal property
subject to the Bank Group's lien, outside the ordinary course of its
business without further notice, hearing or Court order. Such sales
shall be free and clear of liens with such liens attaching to the
proceeds. The Net Proceeds of the sale of Personal Property shall be
paid to the Bank Group at the sale closing. Although such sales are
expressly authorized by this Plan, the Court will retain jurisdiction
to enter an order in aid of consummation, upon such terms as the Court
deems appropriate, to facilitate such sale. Further, with the consent
of the Bank Group Representative, the Debtor may engage, as necessary
or desirable, one or more auctioneers, brokers or outside sales agents,
upon three business days notice to the Bankruptcy Administrator, which
notice shall disclose the proposed agent's contacts with the Debtor,
the compensation to be paid to such agent and whether such agent has
agreed to share its compensation with any other party. Unless objection
is raised in writing by the Bankruptcy Administrator and received by
the Debtor within three business days following such notice, such
agent's engagement shall be deemed approved without the need for formal
application, notice or hearing. If written objection is received by the
Debtor, and not subsequently waived, the terms and conditions of any
such employment shall be subject to approval of the Court.

16
<PAGE>

B. SALES OF REAL PROPERTY: The Debtor shall be authorized to
sell real property with the express written consent of the Bank Group
or upon entry of a specific Court Order authorizing the sale. All such
sales shall be free and clear of liens with such liens attaching to the
proceeds. The Net Proceeds of the sale of Real Property shall be paid
to the Bank Group at the sale closing. In the event the Bank Group
agrees in writing to the specific terms of a proposed real estate sale,
as evidenced by the signatures of its attorney, such sale shall be
deemed to be authorized by and made pursuant to this Plan. Although so
authorized, the Court will retain jurisdiction to enter an order in aid
of consummation, upon such terms as the Court deems appropriate, to
facilitate such sale. With the consent of the Bank Group, the Debtor
may engage, as necessary or desirable, one or more auctioneers, brokers
or sales agents, upon three business days notice to the Bankruptcy
Administrator, which notice shall disclose the agent's contacts with
the Debtor, the compensation paid such agent and whether such agent has
agreed to share its compensation with any other party. Unless written
objection is received by the Debtor from the Bankruptcy Administrator
within three business days of such notice, such agent's engagement
shall be deemed approved. If written objection is received by the
Debtor, and not subsequently waived, the terms and conditions of any
such employment shall be subject to approval of the Court.

4.3 CAUSES OF ACTION:

17
<PAGE>

A. PREFERENCE CLAIMS: Within sixty (60) days following the
Effective Date, the Debtor shall prepare and make available to the
Committee an analysis of all potential Preference Claims. This analysis
shall include information sufficient to determine, with respect to each
Creditor, and to the best of the Debtor's knowledge, the preferential
payments made to such Creditor and the extent to which new value was
received by the Debtor subsequent to the payment in question. Committee
professionals may critically review the Debtor's analysis and undertake
independent efforts to determine its accuracy. The Debtor will make
available to the Committee those employees and professionals primarily
responsible for the analysis and the Debtor shall provide, as
requested, reasonable assistance to the Committee in the verification
process. After the Committee has had a reasonable opportunity to verify
the accuracy of the Debtor's analysis, the Debtor shall, in due course,
extend to each Creditor which has received an alleged preferential
transfer of $2,500.00 or more, a written notice which shall contain the
following:

(i) Notice of the amount of the Preference Claim and a
particular description of the basis therefor;

(ii) A request that the Creditor provide the Debtor with
information in writing which would constitute a
complete or partial defense to the Preference Claim
asserted;

(iii) Notice that the Creditor may elect to settle and
fully compromise the alleged Preference Claim by the
payment of sixty percent (60%) of the

18
<PAGE>

amount of such claim and that such settlement offer
will remain open until the later of thirty days (30)
days following the date of said notice or the date an
adversary proceeding is filed seeking recovery of the
preferential payment;

(iv) Notice that in the event such Creditor elects to
settle the Preference Claim asserted against it on
the basis described above, such Creditor shall not be
entitled to increase the amount of its Allowed
Unsecured Claim by the amount so paid; and

(v) That said notice constitutes a formal demand for
payment, and that upon the filing of an adversary
proceeding to recover the preference, the Debtor will
seek to recover interest from the date of the demand.

In the event the Creditor alleged to have received a preference is an
Insider, the Notice described above shall be issued by the Committee.

In the event an adversary proceeding is instituted to recover a
Preference Claim, any proposed settlement shall be approved only in accordance
with the provisions of Bankruptcy Rule 9019.

The prosecution of Preference Claims against non-Insider Creditors
shall be the responsibility of the Debtor.

19
<PAGE>

responsibility of prosecuting Preference Claims against Insiders in accordance
with the procedures outlined in Paragraph 4.3 above.

4.5 FUNDING:
--------

A. LIQUIDATION BUDGET: Prior to the Confirmation hearing, the
Debtor shall submit a Liquidation Budget which shall be made a part of
this Plan. The Budget shall describe in reasonable detail all
anticipated costs and expenses involved in the sale of Estate Property
and Estate Administration, exclusive of post-Confirmation fees and
expenses of Committee professionals, but inclusive of professional fees
and expenses of the Debtor, other than fees and expenses which may be
attributable to litigation of Preference Actions and Recovery Actions.
Upon the Effective Date sufficient funds will be held in the DIP
account to fund the Liquidation Budget. The Liquidation Budget shall be
subject to modification from time to time, as circumstances dictate,
with the consent of the Bank Group. If the Liquidation Budget does not
appear sufficient to cover all reasonable costs and expenses involved
in the orderly liquidation of Estate Property and final administration
of this Bankruptcy Case, the Court may, after notice and hearing,
approve additions to the Liquidation Budget and appropriate procedures
for funding such additions from the Net Proceeds of Asset Sales, up to
a maximum of $450,000, provided the Court finds that such additional
charge to the Bank Group collateral is fair and equitable.

B. COMMITTEE EXPENSE FUND: For the purpose of defraying the
post- Confirmation expenses of the Committee, a separate interest
bearing account

20
<PAGE>

will be established and maintained by the Debtor into which the sum of
$50,000 will be deposited on the Effective Date. This fund will be
drawn against to pay such expenses of the Committee for professional
fees as are approved by the Court. Any post-Confirmation Committee
Expenses exceeding $50,000.00 will be paid from the Creditors' Fund.

C. CREDITORS' FUND: On the Effective Date the Creditors' Fund
will be established and maintained by the Debtor. The Creditors' Fund
will be funded from time to time by the following:

(i) The Carve Out (which amount is to be deposited
on the Effective Date);

(ii) Net proceeds from the sale of any assets not
encumbered by liens; and

(iii) The proceeds of Recovery Actions.

The Creditors' Fund will be utilized primarily for the purpose of
making distributions to Classes 6, 7 and, if applicable, 8. In
addition, the Creditors' Fund will serve as the source of payment of
that portion of professional fees and expenses incurred by the Debtor
post-Confirmation with respect to Preference Claims and may serve as
the source of payment of other professional fees and expenses of the
Debtor as provided below. The Creditors' Fund will also serve as the
source of payment of approved fees and expenses of Committee
professionals attributable to the pursuit of Recovery Actions, after
the Committee Expense Fund has been depleted. The Creditors' Fund

21
<PAGE>

may be used for the purpose of paying Administrative Expenses only upon
Court order on the determination that the use of such funds is
necessary and fair in order to ensure the payment of such
Administrative Expenses.

4.6 DISTRIBUTIONS:
--------------

A. ADMINISTRATIVE EXPENSES: On the Effective Date all
Administrative Expenses will be paid in full from cash retained by the
Debtor in the DIP account. The fees and expenses of court approved
professionals rendering services pre-Confirmation shall be paid from
funds maintained in the DIP account provided such are within the
parameters of the Liquidation Budget. If such professional fees and
expenses exceed the applicable amount set forth in the Liquidation
Budget, said fees and expenses will be paid from the Creditors' Fund.
In any event, such fees and expenses shall be paid only upon entry of
an appropriate Court order approving the same.

B. POST CONFIRMATION COSTS AND EXPENSES: Following
Confirmation, the costs and expenses of administering the Estate, as
set forth in the Liquidation Budget, will be paid when due from funds
maintained by the Debtor or, in the case of professionals, in
accordance with applicable orders and procedures then in effect for the
payment of professional fees. It is the express purpose and intent of
the Plan that all reasonable costs and expenses of administering this
case shall be paid

22
<PAGE>

and appropriate provisions for such payment shall be made prior to any
distribution to Creditors from the Creditors' Fund.

C. SECURED TAX CLAIMS: Secured Tax Claims will be paid in
full in cash upon the sale of the property securing the claim.

D. PRIORITY UNSECURED CLAIMS: The Debtor has scheduled a
small amount of priority employee related claims and in addition
certain Creditors have asserted priority unsecured claims in filings
with the Court. These priority unsecured claims, if determined and
allowed, will be paid in full in cash from the Creditors' Fund on the
Effective Date. The Debtor is unaware of any pre-petition unsecured Tax
Claims. If any such Claim is determined and allowed such taxing
authority will receive full payment prior to any distribution to
general Unsecured Creditors in Class 6 or the Bank Group deficiency
Claim in Class 7.

E. BANK GROUP SECURED CLAIM: On the Effective Date all funds
held by the Debtor in excess of the amount needed to fund the
Liquidation Budget and the Carve Out shall be paid to the Bank Group in
partial satisfaction of its Allowed Secured Claim. Thereafter, all Net
Proceeds from the realization, liquidation or sale of Estate Property
which serves as Bank Group collateral will be paid to the Bank Group.

F. UNSECURED CREDITOR CLAIMS: Unsecured Creditors (Classes 6
and 7) will receive pro rata distributions from the Creditors' Fund
upon entry of an order authorizing and approving such distribution
after the Final Claims Resolution

23
<PAGE>

Order has been entered; provided however, that Class 7 shall not
participate in the pro rata distribution of any net proceeds derived
from Preference Claims. Earlier distributions to these Unsecured
Creditors will occur only upon Court order issued after notice and
hearing. The Debtor, Bank Group and Committee each shall have standing
to file a motion seeking authorization for earlier, partial
distributions.

G. SHAREHOLDER INTERESTS: After all Creditors have been paid
in full, including the Bank Group on its deficiency Claim and general
Unsecured Creditor Claims, any funds remaining will be distributed to
shareholders of Pluma in accordance with their percentage of stock
ownership in the Debtor. The Debtor does not anticipate that there will
be any such distribution to shareholders.

ARTICLE V

ACCEPTANCE OR REJECTION OF THE PLAN

5.1 SEPARATE VOTING: Each Impaired Class of Claims or Interests shall
be entitled to vote separately as a Class to accept or reject the Plan.

5.2 ACCEPTANCE BY CLASSES: Consistent with Section 1126(c) and except
as provided in Section 1126(e), a Class of Claims shall have accepted the Plan
if the Plan is accepted by the holders of at least two-thirds (2/3) in dollar
amount and more than one-half (1/2) in number of the Allowed Claims of that
Class that have timely and properly voted to accept or reject the Plan.
Shareholders of Pluma will have accepted the Plan if at least 2/3 in amount of
interests voting elect to accept the Plan.

24
<PAGE>

5.3 PERSONS ENTITLED TO VOTE: Holders of record, as of the date of
entry of the Order approving the Disclosure Statement, of Allowed Claims in
Classes 4, 5, 6, 7 and shareholders in Class 8 will be entitled to vote to
accept or reject the Plan.

5.4 CRAM DOWN: If the Plan is rejected by Classes 4, 6 or 8 or any one
of such Classes, the Debtor requests that this Plan nonetheless be confirmed
pursuant to Section 1129(b).

ARTICLE VI

PROVISIONS CONCERNING UNDELIVERABLE DISTRIBUTIONS

6.1 UNDELIVERABLE DISTRIBUTIONS: If the Debtor is unable to make a
payment or distribution to the holder of an Allowed Claim under the Plan for
lack of a current address for the holder or otherwise, it shall file with the
Bankruptcy Court, the name and, if known, the last known address of the holder
and the reason for inability to make payment, and if, after the passage of
thirty (30) days and after any additional effort to locate the holder that the
Bankruptcy Court may direct, the payment or distribution still cannot be made,
the payment or distribution and any further payment to the holder shall be
retained by the Debtor for use and distribution pursuant to the Plan and the
Claim shall be deemed fully discharged.

ARTICLE VII

EXECUTORY CONTRACTS AND UNEXPIRED LEASES

25
<PAGE>

Plan for 1999 shall be assumed on the Effective Date. All other executory
contracts which are not the subject of a pending motion to assume or reject as
of the Confirmation Date, or a pending motion to establish other procedures for
the assumption or rejection, or previously have been rejected by Order of the
Court, shall be deemed rejected on the Effective Date.

7.2 BAR TO REJECTION DAMAGES: A Claim for damages against the Debtor
arising from the rejection by the Debtor of any executory contract or unexpired
lease pursuant to paragraph 7.1 shall be forever barred and shall not be
enforceable against the Debtor its property or interests in property and no
holder of any such Claim shall participate in any distribution under the Plan
with respect to that Claim unless a proof of Claim is served on the Debtor, the
Committee, and the Bank Group and filed with the Bankruptcy Court no later than
thirty (30) days after the Effective Date, unless the Bankruptcy Court has
ordered otherwise. The provisions of this paragraph 7.2 shall not serve to
extend any time period for the filing of a Claim which has previously been
established by the Court arising out of the rejection of any executory contract
or unexpired lease.

ARTICLE VIII

PROCEDURES FOR RESOLVING DISPUTED CLAIMS

26
<PAGE>

Court and mailed to the holder of the Claim to which objection is made within
ninety (90) days following the Effective Date or such other time as might be
established by order entered hereafter by the Court, provided however, that
objections to Claims based on the provisions of Section 502(d) may be made
within sixty (60) days after the entry of the judgment or order requiring
payment to the Debtor. The Debtor (and if applicable, the Committee) shall act
with reasonable promptness to process and resolve all Claims objections.

8.2 PAYMENTS AND DISTRIBUTIONS WITH RESPECT TO DISPUTED CLAIMS: Except
as otherwise specifically provided elsewhere in the Plan, no payment or
distribution shall be made in respect of a Disputed Claim until the Disputed
Claim becomes an Allowed Claim.

8.3 TIMING OF PAYMENTS AND DISTRIBUTIONS WITH RESPECT TO DISPUTED
CLAIMS: Except as otherwise specifically provided elsewhere in the Plan,
payments and distributions on account of each Disputed Claim that becomes an
Allowed Claim after the Effective Date shall be made on the later of twenty (20)
business days after the date that the Disputed Claim becomes an Allowed Claim or
that date on which other Allowed Claims are paid in accordance with the Plan to
the same extent as if the Disputed Claim had been an Allowed Claim on the
Effective Date. Holders of Disputed Claims that become Allowed Claims shall be
bound, obligated and governed in all respects by the provisions of the Plan.

27
<PAGE>

and debtor in possession and as to all Estate Property, including all Bankruptcy
Causes of Action, other than those released or compromised as part of or
pursuant to the Plan provided, however, that for good cause shown the Bank Group
may be allowed to foreclose upon and pursue any such causes of action, claims or
rights constituting collateral for its Class 5 Claim. The Committee will have
the exclusive right as provided in paragraphs 4.3 and 4.4 to pursue Recovery
Actions, not including however Preference Claims against non-Insiders. After the
Effective Date, the Debtor, will retain the right to object to Claims and pursue
if appropriate counterclaims after the Confirmation Date in order to have the
Bankruptcy Court determine the amount and treatment of any Claim.

ARTICLE IX NO

DISCHARGE, BANK GROUP RELEASE
-----------------------------

9.1 NO DISCHARGE: Pursuant to Section 1141(d)(3)(A), Confirmation of
this Plan shall not effect a discharge of the Debtor.

9.2 BANK GROUP RELEASE: In consideration of the Carve Out and the
funding of the Liquidation Budget as provided herein, Confirmation of the Plan
shall have the effect of fully and forever discharging Bank of America, N.A.,
Centura Bank, Suntrust Bank, Atlanta, Crestar Bank and Fleet Bank, N.A. and
their respective officers, directors, shareholders, employees, agents,
representatives, insurers, predecessors, and successors from any and all claims,
losses, liabilities, demands, actions, or causes of action of any kind or
character that Pluma or the Estate may have against Bank of America, N.A.
Centura Bank, Suntrust Bank, Atlanta, Crestar Bank and Fleet Bank, N.A. whether
known or unknown, whether at law or

28
<PAGE>

in equity, and whether in contract, tort, or under statute, including without
limitation any claim to disgorge any proceeds of asset sales approved by order
of the Court and any claims arising under Section 506(c).

ARTICLE X

EFFECTUATION AND SUPERVISION OF PLAN

10.1 RETENTION OF JURISDICTION: The business and assets of the Debtor
shall remain subject to the jurisdiction of the Bankruptcy Court until all
Estate Property is liquidated and the proceeds are distributed hereunder in
full. Subsequent to the Effective Date and until the closing of the Chapter 11
case by the Bankruptcy Court pursuant to Section 350(a) and Bankruptcy Rule
3022, the Bankruptcy Court shall retain jurisdiction over the Debtor and the
Chapter 11 case for purposes of determining all disputes and other issues
presented by or arising under the Plan, including, without limitation,
jurisdiction: (a) to determine any and all disputes relating to Claims and
Interests and the allowance and amount thereof; (b) to determine any and all
disputes among Creditors with respect to their Claims; (c) to resolve disputes
as to the ownership of a Claim or Interest; (d) to consider and allow any and
all applications for compensation for professional services rendered and
disbursements incurred in connection therewith; (e) to determine any and all
applications, motions, adversary proceedings, any contested or litigated matters
pending on the Effective Date and arising and/or relating to the Chapter 11 case
or the Plan; (f) to confirm the Plan as modified pursuant to Section 1127(b) or
to remedy any defect or omission or reconcile any inconsistency in the
Confirmation Order; (g) to hear and determine disputes arising in

29
<PAGE>

connection with the interpretation, implementation, or enforcement of the Plan,
the Confirmation Order, or any documents executed and delivered in connection
with the Plan; (h) to enforce the provisions of the Plan relating to the
distributions to be made hereunder; (i) to issue such orders, consistent with
Section 1142, as may be necessary to effectuate consummation and full and
complete implementation of the Plan, including, without limitation, appropriate
orders to protect the Debtor against actions taken by holders of Claims or
Interests; (j) to hear and determine all actions of a derivative nature or
otherwise brought by the Committee pursuant to Paragraphs 4.3 and 4.4 hereof;
(k) to determine any Bankruptcy Causes of Action not compromised or released by
the Plan; (l) to determine the final amounts allowable as compensation or
reimbursement of expenses pursuant to Section 503(b); (l) to hear and determine
matters concerning federal, state and local taxes ; (m) to resolve any dispute
after the Effective Date relating to any bills submitted by any professional
employed pursuant to Order of the Bankruptcy Court; (n) to hear and determine
any other matter not inconsistent with the Bankruptcy Code; and, (o) to enter a
Final Decree closing the Chapter 11 case. In addition to the foregoing, where
such approval is necessary under the terms of the Plan, the Court shall approve
or disapprove the sale of the Debtor's assets and as to such sales, Section 363
standards shall apply.

ARTICLE XI

30
<PAGE>

MISCELLANEOUS PROVISIONS

11.1 REPORTING REQUIREMENTS: The Debtor shall continue to file monthly
reports during the Liquidation Term. These monthly reports will follow the
format used pre-Confirmation and will be served on the Committee, the Bank Group
and the Bankruptcy Administrator. The Committee will from time to time, but no
less often than bi-monthly, file a report with the Court stating generally the
procedural status of Recovery Action litigation and the expected time of
completion of same.

11.2 COMPLIANCE WITH TAX REQUIREMENTS: In connection with the Plan, the
Debtor will comply with all withholding and reporting requirements imposed by
federal, state and local taxing authorities, and all distributions hereunder
shall be subject to such withholding and reporting requirements.

11.3 BINDING EFFECT OF PLAN: The provisions of this Plan shall be
binding upon and inure to the benefit of the Debtor, any entity affected by this
Plan and their respective predecessors, successors, assigns, agents, directors
and employees.

11.4 AUTHORIZATION OF CORPORATE ACTION: The entry of a Confirmation
Order shall constitute direction and authorization to and of the Debtor to take
or cause to be taken any corporate action necessary or appropriate to consummate
the provisions of this Plan prior to and through the Effective Date.

11.5 RETENTION OF RECORDS: The Debtor will retain its business and
corporate records pending orders of the Court, issued on notice and hearing,
authorizing their destruction.

31
<PAGE>

11.6 CANCELLATION OF CORPORATE CHARTER: Upon entry of an appropriate
order by the Court approving the final distribution to Creditors and the Final
Report filed by the Debtor, the Corporate Charter of the Debtor shall be
canceled.

11.7 NO REVESTING OF ESTATE PROPERTY: Property of the Estate shall not
revest upon confirmation but shall remain Property of the Estate to be
administered hereunder.

11.8 MODIFICATION OF THIS PLAN: The Debtor reserves its rights to
modify this Plan in accordance with Section 1127.

11.9 CAPTIONS: Article and paragraph captions used in this Plan are for
convenience only and shall not affect the construction of this Plan.

11.10 METHOD OF NOTICE: All notices required to be given under this
Plan, if any, shall be in writing and shall be sent by first class mail, postage
prepaid, by overnight courier, or via facsimile transmission

if to the Bank Group, to: if to the Debtor, to:

Bank of America, N.A., Agent Pluma, Inc.
Attn.: Peggy Dugan, Vice President Attn: John D. Wigodsky
8300 Greensboro Drive, Suite 800 26 Broad Street
McLean, VA 22102 Martinsville, VA 24115
Facsimile: (703) 761-8557 Facsimile: (540) 632-6607

with copies to: with copies to:

David L. Eades Allman Spry Leggett & Crumpler, P.A.
Moore & Van Allen, PLLC Attn: C. Edwin Allman, III
100 North Tryon Street, Floor 47 380 Knollwood Street, Suite 700
Charlotte, NC 28202-4003 Winston-Salem, NC 27103-4152
Facsimile: (704) 378-2044 Facsimile: (336) 722-8720

32
<PAGE>

with copies to:

The Committee
c/o David M. Grogan
Shumaker, Loop & Kendrick, LLP
221 South Tryon Street
Charlotte, NC 28202-3247
Facsimile: (704) 372-8457

Any of the above may, from time to time, change its address for future notices
and other communications hereunder by filing a notice of the change of address
with the Bankruptcy Court. Any and all notices given under this Plan shall be
effective when received.

11.11 RESERVATION: If the Plan is not confirmed by the Bankruptcy Court
for any reason, the rights of all parties in interest in the Chapter 11 case
will be preserved in full. Furthermore, any concession reflected herein is made
for purposes of the Plan only, and if the Plan does not become effective, no
party in interest in the Chapter 11 case shall be bound or deemed prejudiced by
any such concession, including a vote which accepts the Plan. Nothing contained
in the Plan waives or shall be deemed to waive any rights of any holder of an
Allowed Claim in the Classes represented by any supporter of the Plan to object
to any provisions of the Plan, all such rights being expressly reserved.

11.12 SAVINGS CLAUSE: If any clause or provision of this Plan is
determined by the Bankruptcy Court to be improper or ineffective, the Plan, at
the request of the Debtor, may be confirmed without that clause or provision.

Respectfully submitted this the ________ day of _______________, 1999.

33
<PAGE>

PLUMA, INC.

By:___________________________________
Its President and Chief Executive Officer

- -------------------------------------------------------
R. Bradford Leggett, North Carolina State Bar No. 2697
C. Edwin Allman, III, North Carolina State Bar No. 8625
M. Joseph Allman, North Carolina State Bar No. 13395
ALLMAN SPRY LEGGETT & CRUMPLER, P.A.
380 Knollwood Street, Suite 700
Post Office Drawer 1529
Winston-Salem, NC 27113-5129
Telephone: (336) 722-2300
Attorneys for Debtor

EXHIBIT 2.2

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
GREENSBORO DIVISION

IN RE: )
)
)
PLUMA, INC. ) CASE NUMBER B-11104C-11G
)
)
DEBTOR. )

- --------------------------------------------------------------------------------

DEBTOR'S DISCLOSURE STATEMENT

OCTOBER 5, 1999

- --------------------------------------------------------------------------------

====================================================================

<PAGE>

TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
I. INTRODUCTION..................................................................................................1

II. BUSINESS AND STRUCTURE OF THE DEBTOR AND EVENTS LEADING TO CHAPTER 11.........................................4
A. Structure..............................................................................4
B. History................................................................................4
C. Events Leading to the Chapter 11 Filing................................................6
D. Business Locations and Property.......................................................11

III. OPERATIONS DURING CHAPTER 11................................................................................14
A. Appointment of Committees and Retention of Professionals..............................14
B. Significant Post-Petition Events......................................................14
1. Cash Collateral..............................................................14
2. DIP Financing................................................................15
3. Payment of Non-Domestic Contractors..........................................16
4. Sale of Stardust Division....................................................18
5. July 1999 Profit.............................................................18
6. Exit Financing...............................................................18
7. Discontinuance of Operations ................................................20

IV. SUMMARY OF THE PLAN..........................................................................................20
A. Classification and Treatment of Claims................................................20
1. Class 1 - Administrative Expenses............................................21
2. Class 2 - Wage and Benefit Claims............................................21
3. Class 3 - Tax Claims .......................................................21
4. Class 4 - Secured Claim of Gaston Dye
and Finishing Company................................................21
5. Class 5 - Secured Claim of the Bank Group....................................22
6. Class 6 - General Unsecured Claims...........................................22
7. Class 7 - Bank Group Deficiency Claim........................................22
8. Class 8 - Shareholders.......................................................23

V. IMPLEMENTATION OF THE PLAN....................................................................................23
A. Generally.............................................................................23
B. Asset Sales ..........................................................................24
1. Sales of Personal Property ..................................................24
2. Sales of Real Property ......................................................25
C. Causes of Action .....................................................................25

<PAGE>

1. Preference Claims ...........................................................25
D. Recovery Actions .....................................................................27
E. Funding ..............................................................................28
1. Liquidation Budget ..........................................................28
2. Committee Expense Fund ......................................................28
3. Creditors' Fund .............................................................29
F. Distributions ........................................................................30
1. Administrative Expenses .....................................................30
2. Post-Confirmation Costs and Expenses ........................................30
3. Secured Tax Claims ..........................................................31
4. Priority Unsecured Claims ...................................................31
5. Bank Group Secured Claim ....................................................31
6. Unsecured Creditor Claims ...................................................31
7. Shareholder Interests .......................................................32
G. Assumption and Rejection of Executory Contracts
And Unexpired Leases ........................................................32
H. Discharge of Debtor and Bank Group Release ...........................................32
I. Retention of Jurisdiction ............................................................33
J. Cancellation of Corporate Charter ....................................................33

VI. CONFIRMATION AND CONSUMMATION PROCEDURE......................................................................33

VII. LIQUIDATION ANALYSIS........................................................................................36
A. Realization of Value..................................................................36
1. Chapter 11 ..................................................................36
2. Chapter 7 Liquidation .......................................................39
B. Benefit to Creditors..................................................................40
1. Chapter 11 ..................................................................40
2. Chapter 7 ...................................................................41
C. Benefit to Employees..................................................................41
1. Chapter 11 ..................................................................41
2. Chapter 7 ...................................................................42
D. Efficiency in the Administration of the Case..........................................43

VIII. PROJECTED CASH DISBURSEMENTS
FROM THE LIQUIDATION BUDGET ............................................................................44

IX. ATTACHMENTS OF SPECIFIC INFORMATION .........................................................................45

X. CONCLUSION....................................................................................................46
</TABLE>

ii
<PAGE>

DISCLOSURE STATEMENT TO DEBTOR'S PLAN OF LIQUIDATION
----------------------------------------------------

PLUMA, INC., Debtor in the above-entitled Chapter 11 case
(hereinafter sometimes referred to as the "Company" or "Pluma" or the "Debtor"),
submits the following Disclosure Statement pursuant to Section 1125 of the
Bankruptcy Code(1) to Creditors and shareholders of the Debtor in connection
with the solicitation of acceptances or rejections of its Plan of Liquidation
dated September 24, 1999 (the "Plan"), a copy of which is attached hereto as
Exhibit G. Unless otherwise defined herein, all capitalized terms contained
herein shall have the meanings ascribed to them in the Plan.

INTRODUCTION
------------

Section 1125 requires that there be submitted to holders of claims
against the Debtor a copy of the Plan, or a summary thereof, and a written
Disclosure Statement containing sufficient information about the Company to
enable Creditors and shareholders to make an informed decision concerning
acceptance of the Plan. As will be described in greater detail hereafter,
Pluma's Chapter 11 filing was the result of market factors, circumstances, and
financial difficulties which began in 1997 and from which the Company was not
able to recover. The Plan has been formulated to provide a basis for the orderly
liquidation of the Company's assets and thus enable the Company to maximize the
value of the Estate. It is

- -----------------
(1) References to "Section _______" herein shall refer to a Section of the
Bankruptcy Code 11 U.S.C ss101, et seq.

<PAGE>

the Company's belief that the Plan provides value to Creditors in excess of what
they would recover under a Chapter 7 liquidation. It contemplates an orderly
liquidation of the Company's assets which are secured by liens in favor of the
Company's secured creditor, the Bank Group. It also provides, however, a Carve
Out pursuant to which $750,000.00 of the Net Proceeds from asset sales which
would otherwise go to the Bank Group will instead be paid the Creditors' Fund
primarily for the benefit of Unsecured Creditors. Additionally the Bank Group
will not participate in the distribution of any Net Proceeds realized from
Preference Claims.

EXCEPT AS OTHERWISE SPECIFICALLY INDICATED HEREIN, THE INFORMATION IN
THIS DISCLOSURE STATEMENT REGARDING THE COMPANY AND THE COMPANY'S BUSINESS
OPERATIONS IS DERIVED ENTIRELY FROM REPORTS AND DOCUMENTS PREPARED BY OR FOR THE
COMPANY. UNLESS OTHERWISE STATED HEREIN, THE INFORMATION AND ANALYSIS SET OUT IN
THIS DISCLOSURE STATEMENT IS CURRENT AS OF SEPTEMBER 20, 1999.

THE FINANCIAL INFORMATION CONTAINED HEREIN RELATIVE TO THE COMPANY'S
FISCAL YEAR ENDING DECEMBER 31, 1998 HAS BEEN SUBJECT TO A CERTIFIED AUDIT.
HOWEVER, FINANCIAL INFORMATION ATTRIBUTABLE TO SUBSEQUENT PERIODS HAS NOT. WHILE
GREAT EFFORT HAS BEEN MADE TO ASSURE THAT THE FINANCIAL INFORMATION CONTAINED
HEREIN IS ACCURATE, THE COMPANY IS

2
<PAGE>

UNABLE TO REPRESENT OR WARRANT THAT THE INFORMATION CONTAINED HEREIN IS WITHOUT
ANY INACCURACY.

NO REPRESENTATIONS MADE CONCERNING THE COMPANY, ITS BUSINESS
OPERATIONS, THE VALUE OF ITS PROPERTY, OR THE VALUE OF ANY BENEFITS CONFERRED TO
CREDITORS OR OTHER PARTIES IN INTEREST IN CONNECTION WITH THE PLAN ARE
AUTHORIZED OR MADE OTHER THAN AS SET FORTH IN THIS DISCLOSURE STATEMENT. ANY
REPRESENTATIONS OR INDUCEMENTS MADE TO SECURE YOUR ACCEPTANCE WHICH ARE CONTRARY
TO THE INFORMATION CONTAINED IN A DISCLOSURE STATEMENT APPROVED BY THE
BANKRUPTCY COURT SHOULD NOT BE RELIED UPON BY YOU IN REACHING YOUR DECISION
CONCERNING VOTING ON THE PLAN.

It is the opinion of the Company that the treatment of Creditors under
the Plan contemplates a recovery preferable to that which would be achieved
under a Chapter 7 liquidation of the Company's assets, the only other
alternative available to the Debtor. In a Chapter 7 liquidation the Company
believes that Unsecured Creditors would receive nothing, whereas by virtue of
the Carve Out and the manner of distribution of proceeds of Recovery Actions
under the Plan, Unsecured Creditors should receive a dividend distribution on
their Allowed Claims. Further, as an orderly liquidation is contemplated under
the Plan, the possibility is preserved that portions of the assets may be sold
in such manner as to preserve jobs and business relationships. Accordingly, the
Company believes strongly that

3
<PAGE>

confirmation of the Plan is in the best interests of Creditors and other parties
in interest and recommends acceptance of the Plan.

II.

BUSINESS AND STRUCTURE OF THE DEBTOR AND
----------------------------------------
EVENTS LEADING TO CHAPTER 11
----------------------------

A. STRUCTURE.
----------
Pluma, Inc. is a publicly traded corporation and its common
stock was, until May, 1999, traded on the New York Stock Exchange under the
symbol PLU. As of March 29, 1999, there were approximately 233 shareholders of
record and 8,109,152 shares of common stock outstanding.

B. HISTORY.
--------
Pluma was incorporated on December 1, 1986 by a group of
individuals who at the time had over one hundred (100) years of collective
industry experience. The founders envisioned that the Company could produce high
quality activewear cost effectively and sell to a more diverse customer base
than was common in the industry. The Company fashioned itself an industry leader
in the development of new products and styles while at the same time also
establishing higher quality standards. The Company was one of the first to
introduce heavy weight fuller cut fleece products at attractive price points and
fleece wear with higher cotton content. These products were well received by
customers and the Company rapidly increased sales and profitability as it
expanded its business across broad market segments. In 1990 the Company began to
produce heavy weight cotton jersey products suitable for

4
<PAGE>

outerwear thus diversifying its product mix and more efficiently utilizing its
manufacturing base. By 1997 the Company had continued to be a leading innovator
of products introducing pique fleece, 100% cotton fleece and cotton/Spandex(TM)
five way stretch fleece.

In 1997 the Company completed the initial public offering of
its stock. Proceeds raised by the public offering of approximately $27.0 million
were used by the Company to reduce the Company's outstanding indebtedness to
First Union National Bank, then the Company's lender.

To take advantage of lower production costs, during 1997 Pluma
began utilizing the services of joint ventures and contractors in Mexico to sew
certain of its goods. Additionally, in 1998 the Company utilized the services of
a company in Honduras to complete the manufacturing process necessary to
complete certain of the Company's jersey products.

As part of a strategy of distributing its products to a
diverse customer base, in December of 1997 Pluma initiated the creation of a
national distribution network by acquiring for cash substantially all the assets
and properties of two nationally recognized wholesale distributorships, Stardust
Corporation ("Stardust") and Frank L. Robinson Company ("FLR"), both of which
had been major customers of the Company. Stardust is located in Verona,
Wisconsin and has operated since 1988. It served approximately 6,000 customers
throughout the midwestern United States. FLR was located in Los Angeles,
California and had operated since 1936 and served approximately 3,000 customers
in the western United States.

5
<PAGE>

The Company had been notified separately by FRL and Stardust
that each was going to be sold and that the Company should consider making an
offer. The Company, considering the effect of a sale of FLR and/or Stardust to
third parties, possibly competitors, became concerned that their respective
acquisitions by third parties would have a negative impact on the Company's
sales. The Company felt that FLR and Stardust had the experience and capability
to distribute the Company's products to smaller customers, which the Company, as
a manufacturer, found difficult to serve as efficiently. The Company determined
that the creation of this network would be of great benefit by bringing Pluma
closer to the ultimate consumer and allowing the Company to sell directly to
retail customers which had largely been inaccessible in the past except through
wholesale distributors. Pluma also contemplated the continuation of the ability
to service other wholesale distributors not owned by the Company.

C. EVENTS LEADING TO THE CHAPTER 11 FILING.
----------------------------------------

Pluma's financial difficulties began in the second quarter of
fiscal year 1997 when a reconfiguration of certain of the Company's textile
operations caused sales and earnings to fall short of expectations. This
reconfiguration involved the relocation of the knitting, greige fabrics, and
cutting departments in Eden, North Carolina and resulted in delays in production
and the shipment of orders. During the third quarter of 1997, the Company
continued to feel the negative impact of the reconfiguration and also
experienced product quality issues due to changes in manufacturing processes and
defective yarn. As a

6
<PAGE>

result of these events, the Company's third quarter 1997 earnings fell
significantly below expectations.

Also, by the beginning of 1997 the Company's management
information system was no longer sufficient to service the Company's needs.
During 1997, the Company contracted for a new management information system with
SAP America, Inc. (SAP). The implementation of the SAP system was protracted and
consumed more capital and managerial time than had been anticipated.

In the fourth quarter of 1997, Pluma reported a loss due
primarily to $2.1 million in expenses associated with the implementation of the
new management information system. Throughout 1997, the Company had capitalized
these costs; however, in the fourth quarter, it expensed them in accordance with
an accounting policy that was released in November 1997. The implementation of
the new management information system was intended to improve the Company's
production planning, scheduling, distribution, and financial reporting
capabilities. The SAP system did not accomplish these objectives. To the
contrary, the integration of the new system created substantial problems in each
of these areas.

In addition to the operational problems described above, Pluma
took on additional debt during the fourth quarter of 1997 as a result of the
acquisition of the two wholesale distributors referenced above. In December
1997, the Company purchased Stardust and FLR for a total of $51.5 million in
cash, including acquisition costs, and the assumption of $16.7 million in
liabilities.

7
<PAGE>

Over the course of 1998, the Company incurred increasing
losses due to market conditions and other factors. Market conditions
contributing to the decline in performance included a drop in sale prices
related to increased competition and lower than expected sales of fleece
products due to a relatively warm winter. In addition, the Company's sales as
well as margins suffered from disruptions in production associated with the
implementation of the SAP system, including continuous system problems that
affected its ability to schedule and produce its products according to customer
specifications. As a result, the Company accumulated excess inventory of certain
types of products, while at the same time losing sales because it could not
timely manufacture other types of products ordered by its customers.

A temporary supply disruption to Stardust and FLR in 1988 also
contributed to lost sales and the build-up of inventory. Two third party
manufacturers, who in 1997 had supplied over 50% of Stardust's inventory and a
significant portion of FLR's inventory, ceased shipping product to the two
distributors in early 1998. These manufacturers did not resume shipments until
mid-year 1998. During the supply disruption to the distributors, Pluma attempted
to manufacture product for its distributors internally and/or acquire product
from alternate sources. This unexpected demand on the Company's manufacturing
facilities resulted in delayed production and missed orders for other customers.

Another outcome of the supply disruption was the Company's
accelerated effort to obtain product from Latin American manufacturers. During
1998, Pluma aggressively sought arrangements with Latin American manufacturers;
however, it did not

8
<PAGE>

realize the full benefit of these relationships due to quality problems and the
failure of these manufacturers to provide product in a timely manner.

By the Spring of 1998, the Company's operational performance
and attendant lack of earnings were of great concern to the Company's Board of
Directors. During that period two additional outside directors were added to the
Board and a review of the adequacy of the Company's management structure and a
preliminary analysis of the SAP system were undertaken.

During this difficult period, the Company closed a new credit
facility (the "Credit Agreement") in the amount of $115 million with
NationsBank, N.A., Crestar Bank, Fleet Bank, N.A., Suntrust Bank Atlanta and
Centura Bank (the "Bank Group"). In June of 1998, two months after the loan
closing, the Company violated certain financial and performance covenants and
became in default under the Credit Agreement. Subsequent to this default, the
Bank Group agreed to a number of short-term amendments and waivers to the Credit
Agreement. On November 16, 1998, the Bank Group and the Company entered into a
Forbearance Agreement, pursuant to which the Bank Group agreed to forbear from
exercising its rights and remedies as set forth in the Credit Agreement. The
Forbearance Agreement was generally amended in 30-day intervals, until March 31,
1999, when the Bank Group agreed to extend and modify the Credit Agreement until
September 30, 1999. On April 15, 1999, the Bank Group agreed to an additional
amendment to the Credit Agreement. This amendment provided a cure period for an
interest payment default until June 11, 1999.

9
<PAGE>

As a part of its negotiations with its Bank Group, the Company
was required to retain various consultants to assist in the development and
implementation of a strategic business plan and in the management of the
Company's operations. This was at a period of time when the Company was
operating under the strain of severe cash shortages. Business plans were
prepared but the Company's acute shortage of cash made their implementation
difficult. During the fourth quarter of 1998 and first quarter of 1999, the
Company implemented a number of initiatives in order to remain operationally
viable. These initiatives included the expedited liquidation of a significant
amount of inventory, the closure of certain domestic manufacturing and
distribution operations, and a substantial reduction in employees.

In October 1998, Pluma announced an eleven percent reduction
in salaried and hourly indirect labor positions. In January 1999, the Company
announced the consolidation of its sewing plant in Eden, North Carolina into
existing facilities, the anticipated closing of its sewing facility in Rocky
Mount, Virginia and the closing of six outlet stores, and twenty-five percent
and nineteen percent reductions in its indirect and direct labor pools,
respectively. In March 1999, the Company announced the elimination of one
hundred thirty-five more positions and its intention to close the operations of
FLR. The decision to close FLR came after the Company was unsuccessful in its
efforts to locate a buyer for FLR. Early in the second quarter of 1999, the
Company announced further cost cutting measures, including the closing of
facilities in Altavista and Chatham, Virginia and the planned sale of its sales
office in Martinsville, Virginia.

10
<PAGE>

Despite Pluma's continuing efforts to reduce costs, the
Company was unable to resolve its liquidity shortfall. In the second quarter of
1999, tighter supplier restrictions, the erosion of the Company's borrowing base
due to certain uncollectible accounts receivable of FLR, and the bankruptcy of a
major customer exacerbated an already severe cash crisis. On May 14, 1999, the
Company filed its petition under Chapter 11 of the United States Bankruptcy
Code.

D. BUSINESS LOCATIONS AND PROPERTY.
--------------------------------

As of the Petition Date, all of the Company's facilities were
located in North Carolina, California, Virginia and Wisconsin. All of the
Company's buildings are well maintained and several of its facilities have been
expanded since operations were commenced in 1987. All of the facilities owned by
the Company are encumbered by deeds of trust in favor of the Bank Group. The
principal facilities summarized below are those facilities utilized by the
Company in 1998. The Company consolidated certain of its operations in 1999 and
any changes occurring prior to March 26, 1999 are footnoted. The location,
approximate size, owned or leased status, year in which operations commenced and
use of the Company's principal facilities are summarized in the following table:

LOCATION SQUARE FOOTAGE OWNERSHIP OPERATIONS COMMENCED USE
- ------------------------ ---------------------- ---------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C>
</TABLE>

11
<PAGE>

<S> <C> <C> <C> <C>
Eden, NC 170,900 Owned 1987 Executive offices,
dyeing, finishing
and cutting

Eden, NC 139,169 Owned 1993 Knitting and yarn
storage

Eden, NC 20,600 Leased 1996(1) Outlet Store

Eden, NC 18,000 Leased 1987(2) Sewing

Martinsville, VA 198,000 Leased 1996 Distribution and
warehouse

Martinsville, VA 181,600 Leased 1988 Distribution,
packaging and
warehouse

Martinsville, VA 83,200 Leased 1994(7) Distribution,
packaging and
management
information systems

Martinsville, VA 43,900 Owned 1988 Sewing

Martinsville, VA 15,600 Leased 1992(3) Storage

Martinsville, VA 11,500 Leased 1997(1) Product

Martinsville, VA 8,300 Owned 1997 Marketing and sales
office and some
executive offices

Rocky Mount, VA 82,000 Owned 1995(4) Sewing

Chatham, VA 52,000 Owned 1990 Sewing

Vesta, VA 24,000 Owned 1994(5) Sewing

Altavista, VA 2,200 Leased 1997(1) Outlet store

Los Angeles, CA 139,500 Leased 1997(6) Distributor

Verona, WI 63,000 Owned 1997 Distributor

</TABLE>

(1) In December 1998, the Company made the decision to close the factory
outlet locations. The Eden Factory Outlet lease terminated December 31,
1998. The Martinsville Factory Outlet lease ended March 20, 1999.
Product Development, once housed at this same location, was relocated
to the Company's main facility in Eden, NC. The Altavista Factory
outlet closed January 31, 1999.

(2) The Company leased this facility to perform sewing operations from 1987
through 1993 and subsequently executed a new lease for this facility in
December 1996. Sewing operations ceased in this facility in January
1999 and it is currently used for storage.

(3) This lease terminated February 12, 1999.

12
<PAGE>

(4) Sewing operations ceased at this facility in April 1999 and the Company
sold this property by an absolute auction in August of 1999.

(5) The Company exercised its option to purchase this property in October
1997.

(6) The Company began the process of closing this facility in March 1999.
The lease for this facility was rejected by order of the Bankruptcy
Court on June 23, 1999.

(7) The pre-assembly, packaging and distribution operations at this
facility were consolidated into the Company's other existing facilities
in March 1999. The Company entered a new lease effective March 31, 1999
to lease 1,116 square feet of this same facility to house some of its
Management Information Systems.

[THE REST OF THIS PAGE IS INTENTIONALLY BLANK]

13
<PAGE>

III.

OPERATIONS DURING CHAPTER 11

A. APPOINTMENT OF COMMITTEES AND RETENTION OF PROFESSIONALS.
---------------------------------------------------------

The Company, with Court approval, engaged Allman Spry Leggett
& Crumpler, P.A. to serve as its general counsel in connection with the Chapter
11 case. With Court approval, the Debtor also engaged the services of
PricewaterhouseCoopers as its financial advisors and consultants and Deloitte &
Touche as its certified public accounting firm.

During the early stages of this case an Unsecured Creditors
Committee was appointed pursuant to Section 1102. The Committee, with Court
approval, engaged the services of Blair Conaway Bograd & Martin, P.A. of
Charlotte, North Carolina to represent it in this case. In addition the Court
authorized the Committee to engage the services of Arthur Andersen, LLP to serve
as the Committee's financial consultants and to perform certain investigatory
functions to assist the Committee in performing its duties and responsibilities.

B. SIGNIFICANT POST-PETITION EVENTS.

During the course of this Chapter 11 case a number of events
occurred which were of significance. These are summarized as follows:

1. CASH COLLATERAL. The Bankruptcy Code prohibits a Debtor
from using cash collateral without the consent of the secured creditor
or an order of the Bankruptcy Court. The Company would have been unable
to continue its operations

14
<PAGE>

without the use of proceeds from the collection of its accounts
receivable which were pledged to the Bank Group and which constitute
the Bank Group's cash collateral.

Contemporaneously with the filing of its bankruptcy petition, the
Company filed a motion seeking authority to use cash collateral in the
ordinary course of its business and the Company proposed to adequately
protect the Bank Group's interests by granting to the Bank Group a
replacement lien on post-petition assets to the extent cash collateral
was consumed in the Company's operations. On May 17, 1999 the Bank
Group and the Company reached an agreement on the Company's use of the
Bank Group's cash collateral and an order approving the agreement was
entered by the Court on a preliminary basis. A final hearing was
scheduled for early June. The Court order approving the Company's use
of cash collateral contained an operational budget and required the
Company to maintain certain levels of accounts receivable and inventory
(the "Borrowing Base"). From the beginning the Company experienced
difficulty in complying with the Borrowing Base restrictions in the
cash collateral order. Faster than anticipated collection of accounts,
write downs of inventory to appropriate levels to reflect the lower of
cost or market and the aging of existing accounts receivable created a
continual erosion of the Borrowing Base and made compliance with the
cash collateral order difficult for the Company.

2. DIP FINANCING. At the time of its Chapter 11 filing it was
anticipated that the Company would need additional financing in order
to sustain its operations during the Chapter 11 case. Negotiations with
the Bank Group concerning the

15
<PAGE>

availability of a Debtor-In- Possession financing facility (the "DIP
Facility") were initiated and remained ongoing from the inception of
the case. On June 21, 1999 the Company and the Bank Group agreed to a
$3.0 million short-term DIP Facility and a motion to approve and
authorize such facility was filed with the Court. On June 23, 1999 an
interim order was entered approving the DIP Facility and authorizing
the Company to borrow up to $2.0 million on an interim, emergency
basis. Following the entry of this order the Company borrowed $1.5
million, thereby relieving an immediate cash crisis. On July 9, 1999 a
final order was entered authorizing the DIP Facility. By its terms,
however, the DIP Facility expired on August 27, 1999 and all amounts
borrowed under the Facility were repaid on that date.

The failure of the Company to obtain a longer term DIP Facility
adversely affected its ability to obtain trade credit from its
suppliers. Perhaps more importantly, the Company's customers, concerned
about the Company's operational viability given its lack of financing,
were reluctant to submit orders for future sales. As a result, without
having a sufficient number of booked sales, the Company's ability to
obtain exit financing in amounts necessary to fund a reorganization
plan vanished.

3. PAYMENT OF NON-DOMESTIC CONTRACTORS. Prior to its Chapter
11 filing, the Company maintained strategic business alliances with a
number of non-domestic contractors. These included shipping and
transportation companies, contractors that improved or enhanced
inventory received from the Company, and

16
<PAGE>

companies that manufactured finished goods for the Debtor for resale to
the Debtor's customers.

On the Petition Date a significant amount of the
Company's inventory, in varying stages of completion, was located in
Honduras and Mexico. The return of these goods to the Debtor in the
United States virtually stopped with the Debtor's bankruptcy filing.
Shipping and transportation companies would not allow the goods to
cross the border into the United States without payment of outstanding
pre-petition amounts. Similarly, contractors refused further work or
deliveries until their pre-petition indebtedness was paid. The failure
to maintain and preserve its relationships with its foreign contractors
was potentially fatal to the Company's ability to continue in business.

On May 21, 1999 the Company filed a motion for
authority to pay non-domestic contractors for post-petition receipt of
goods in the ordinary course of business and for authority to pay
certain pre-petition obligations due non-domestic contractors in order
to preserve the ability of the Debtor to conduct business outside the
United States. An expedited hearing was scheduled and notice of the
hearing was served on parties in interest. On May 27, 1999, following a
hearing on notice, an order granting the Debtor authority to pay
certain non-domestic contractors and shippers to preserve the ability
of the Debtor to conduct business outside the United States was entered
by the Court. As a result of the entry of this order, the Debtor's
goods again began to flow across the border and the Company's business
was able to

17
<PAGE>

continue. Had these payments not been made, the Company believes that
the losses it would have incurred would have been substantially greater
than the amounts paid to the non-domestic contractors.

4. SALE OF THE STARDUST DIVISION: On July 13, 1999, the Debtor
filed its motion seeking authority to sell the assets realized in
connection with the operation of its Stardust division. On August 3,
1999, the Court entered an order authorizing the sale of these assets
to TAM Acquisition Corp. The sale was consummated and the Debtor
received a net payment of $10,437,000.00 for the sale. As a result of
the fact that the Debtor had previously announced its intent to sell
the Stardust Division, the Debtor's accounting firm wrote off the good
will attributable to the Stardust Division which had been reflected on
the December 31, 1998 balance sheet. This adjustment, together with
significant adjustments for inventory were the two major reasons for
the differences in the Debtor's balance sheet as of December 31, 1998
and as of June 30, 1999. See Exhibit A attached hereto.

5. JULY 1999 PROFIT.In July, 1999 the measures previously
implemented by management which reduced overhead and improved plant
efficiency resulted in net consolidated income (earnings before
interest and taxes) of $335,000. July, 1999 thus became the first
profitable month for the Company since early in 1998.

6. EXIT FINANCING...From the beginning of this case, the
Company made continuous and diligent efforts to secure outside
financing in order to fund a Plan of reorganization. Such a plan would
have been premised upon the write down

18
<PAGE>

of the Bank Group secured claim to a level that could have been retired
through new borrowings and perhaps new equity infusion. This approach
was mandated by the Bank Group's stated desire to exit from the Credit
Facility altogether. Investors were sought as well as new lenders.

The Debtor's ability to secure an equity investment was made
difficult by an its inability to demonstrate a consistent
profitability. The Debtor did develop a business plan that projected
profitable operations during calendar year 2000. However, the Plan also
projected an operational shortfall for the remainder of 1999, for which
the company would need sufficient working capital in order to
compensate for the projected losses and still remain a viable business
concern. Prospective lenders, rightly concerned about the projected
losses, insisted that sufficient availability remain on any proposed
loan to cover the shortfalls. This requirement, in turn, reduced the
amount that would be available for payment to the Bank Group under a
plan, thus making reorganization difficult without significant new
equity investment in the Company. Although considerable effort was
expended in attempts to locate new investors, none were forthcoming.
The failure to secure new equity together with the inability to book a
sufficient volume of future sales from new or existing customers
ultimately proved to be fatal to the Company's ability to continue as a
going concern.

7. DISCONTINUANCE OF OPERATIONS. Following extended
negotiations with the Bank Group concerning financing and after exhausting the
prospects of the sale of part

19
<PAGE>

or all of the Company as a going concern, the Company, on September 7, 1999,
announced its intention to discontinue its operations. Lay offs of Company
employees were begun at the end of that week and a plan of orderly liquidation
was agreed upon in concept by the Debtor and the Bank Group. In connection with
the shutdown, discussions with the Committee also took place, during which the
Committee was advised of the Company's status and inviting the Committee's input
with respect to a formal Plan of Liquidation.

IV.

SUMMARY OF THE PLAN THE
-----------------------

FOLLOWING IS A SUMMARY RELATING TO THE PLAN AND SHOULD NOT BE RELIED UPON FOR
VOTING PURPOSES. CREDITORS ARE URGED TO READ THE PLAN IN FULL. THE PLAN
REPRESENTS A PROPOSED LEGALLY BINDING CONTRACT BY THE COMPANY AND AN INTELLIGENT
DECISION CONCERNING SUCH PLAN CANNOT BE MADE WITHOUT AN UNDERSTANDING OF THE
PLAN. FURTHERMORE, CERTAIN TERMS ARE USED IN THIS AND THE FOLLOWING PARAGRAPHS,
WHICH ARE DEFINED IN THE TEXT OF THE PLAN AND REFERENCE SHOULD BE MADE THERETO
FOR A CLEAR UNDERSTANDING OF THE IMPORTANCE OF THESE TERMS.

A. CLASSIFICATION AND TREATMENT OF CLAIMS.
---------------------------------------

1. CLASS 1 - ADMINISTRATIVE EXPENSES. Administrative Expenses
generally consist of debts incurred in the ordinary course of the
Debtor's

20
<PAGE>

business and Chapter 11 related costs and expenses and are entitled to
be paid in full, in cash, when due. The Debtor's Plan proposes such
treatment and sufficient funds will remain on hand to fund the
Liquidation Budget, a tentative draft of which is attached hereto as
Exhibit C, which may be modified from time to time with the consent of
the Bank Group. Administrative Expense claims are not impaired.

2. CLASS 2 - WAGE AND BENEFIT CLAIMS. All Wage and Benefit
Claims will be paid in full from the Creditors' Fund, in cash on the
later of the Effective Date or the date which is twenty (20) business
days after the date on which the Employee Wage or Benefit Claim becomes
an Allowed Claim. To the extent that any such Allowed Claims exist,
Pluma believes that they will not be significant.

3. CLASS 3 - TAX CLAIMS. Allowed Tax Claims secured by liens
on real estate shall be paid in full in cash upon the sale of such real
estate or within twelve (12) months following the Effective Date,
whichever first occurs. To the extent other Tax Claims exist, they
shall be paid in full from the Creditors' Fund within thirty (30) days
after such claim becomes Allowed.

4. CLASS 4 - SECURED CLAIM OF GASTON DYE AND FINISHING
COMPANY. This Class 4 Claim is secured by a lien on certain equipment
owned by the Debtor. The Debtor will abandon the collateral to the
Class 4 Creditor in full satisfaction of the Class 4 Claim and this
creditor shall have a right to assert any deficiency claim as a Class 6
Claim. Class 4 is impaired.

21
<PAGE>

5. CLASS 5 - SECURED CLAIM OF THE BANK GROUP. This Class
consists of the pre-petition Secured Claim of the Bank Group, which is
impaired. The Bank Group, after the funding of the Carve Out and the
Liquidation Budget shall receive all of the Net Proceeds from the
post-petition realization, sale or disposition of Estate Property on
which the Bank Group holds a perfected lien. Payment to the Class 5
Creditor shall be limited to distributions from realizations on assets
which serve as collateral for the Bank Group's Allowed Secured Claim.
The Bank Group deficiency claim shall be a Class 7 Unsecured Claim.

6. CLASS 6 - GENERAL UNSECURED CLAIMS. Class 6 shall consist
of the Allowed Claims of General Unsecured Creditors, exclusive of the
Bank Group deficiency claim. Class 6 Claims are impaired. Class 6
Creditors shall receive pro rata distributions from the Creditors'
Fund, as provided in Article IV of the Plan, until all Estate assets
have been fully liquidated and the proceeds distributed to Creditors,
or until their respective Claims shall have been paid in full,
whichever first occurs.

7. CLASS 7 - BANK GROUP DEFICIENCY CLAIM. Class 7 shall
consist of the unsecured deficiency claim of the Bank Group. The Class
7 Claim is impaired. The Class 7 Claim will share, pro rata, with Class
6 Creditors on all distributions from the Creditors' Fund exclusive of
and after taking account of distributions resulting from the Carve Out
and the recovery of Preference Claims. For distribution and voting
purposes, the Bank Group deficiency claim shall be deemed Allowed in
the amount of $50.0 million.

22
<PAGE>

8. CLASS 8 - SHAREHOLDERS. Class 8 shall consist of the
holders of the Stock of Pluma, Inc. Class 8 Interests are impaired.
Shareholders shall retain their respective equity interests and shall
be entitled to pro-rata distributions from the Creditors' Fund after
all Allowed Creditor Claims have been paid in full and discharged. The
Company anticipates that it is extremely unlikely that all Creditor
Claims will be paid in full and therefore no distribution is expected
to be made to shareholders of the Debtor.

IMPLEMENTATION OF THE PLAN
--------------------------

A. GENERALLY. The Plan serves as the mechanism for the orderly
liquidation of all Estate Property in Pluma's bankruptcy case and provides for
the distribution of funds realized through the liquidation process to Creditors.
It does not appear that sufficient funds will be realized from the liquidation
to satisfy all Creditor Claims in full. Accordingly, the Plan provides for
distribution to shareholders of Pluma only after all Creditor Claims have been
satisfied. While the Debtor expects that the sale of the Debtor's real property
and tangible personal property will be accomplished within six months following
Confirmation, the final distribution to Creditors will need to await the
conclusion of any litigation by or against the Debtor and the Debtor's Estate.
The Plan does provide a mechanism, however, for an interim distribution to
Unsecured Creditors, if circumstances warrant.

B. ASSET SALES. With respect to the sale of assets following
Confirmation, the following procedures shall apply:

23
<PAGE>

1. SALES OF PERSONAL PROPERTY. In winding down its business
operations, the Debtor may continue to sell inventory in the ordinary
course of its business. The Debtor, with the consent of the Bank Group
Representative, shall be free to consummate sales of personal property
subject to the Bank Group's lien, outside the ordinary course of its
business without further notice, hearing or Court order. Further, with
the consent of the Bank Group Representative, the Debtor may engage, as
necessary or desirable, one or more auctioneers, brokers or sales
agents, upon three business days notice to the Bankruptcy
Administrator, which notice shall disclose the proposed agent's
contacts with the Debtor, the compensation to be paid to such agent and
whether such agent has agreed to share its compensation with any other
party. Unless objection is raised in writing by the Bankruptcy
Administrator and received by the Debtor within three business days,
such agent's engagement shall be deemed approved without the need for
formal application, notice or hearing. If written objection is received
by the Debtor, and not subsequently waived, the terms and conditions of
any such employment shall be subject to approval of the Court.

2. SALES OF REAL PROPERTY. The Debtor shall be authorized to
sell real property with the express written consent of the Bank Group
or upon entry of a specific Court order authorizing the sale. In the
event the Bank Group agrees in writing to the specific terms of a
proposed real estate sale, as evidenced by the signature of its
attorney, such sale shall be deemed to be authorized by and made
pursuant to the Plan. Although so authorized, the Court will retain
jurisdiction to

24
<PAGE>

enter an order in aid of consummation, upon such terms as the Court
deems appropriate, to facilitate such sale. With the consent of the
Bank Group, the Debtor may engage, as necessary or desirable, one or
more auctioneers, brokers or sales agents, upon three business days
notice to the Bankruptcy Administrator, which notice shall disclose the
agent's contacts with the Debtor, the compensation paid such agent and
whether such agent has agreed to share its compensation with any other
party. Unless written objection is received by the Debtor from the
Bankruptcy Administrator within three business days after such notice,
such agent's engagement shall be deemed approved. If written objection
is received by the Debtor, and not subsequently waived, the terms and
conditions of any such employment shall be subject to approval of the
Court.

C. CAUSES OF ACTION.

1. PREFERENCE CLAIMS. Within sixty (60) days following the
Effective Date, the Debtor shall prepare and make available to the
Committee an analysis of all potential Preference Claims. This analysis
shall include information sufficient to determine, with respect to each
Creditor, and to the best of the Debtor's knowledge, the preferential
payments made to such Creditor and the extent to which new value was
received by the Debtor subsequent to the payment in question. Committee
professionals may critically review the Debtor's analysis and undertake
independent efforts to determine its accuracy. The Debtor will make
available to the Committee those employees and professionals primarily
responsible for the analysis and the

25
<PAGE>

Debtor shall provide, as requested, reasonable assistance to the
Committee in the verification process. After the Committee has had a
reasonable opportunity to verify the accuracy of the Debtor's analysis,
the Debtor shall, in due course, extend to each Creditor which has
received an alleged preferential transfer of $2,500.00 or more, a
written notice which shall contain the following:

(a) Notice of the amount of the Preference Claim and a
particular description of the basis therefor;

(b) A request that the Creditor provide the Debtor with
information in writing which would constitute a
complete or partial defense to the Preference Claim
asserted;

(c) Notice that the Creditor may elect to settle and
fully compromise the alleged Preference Claim by the
payment of sixty percent (60%) of the amount of such
claim and that such settlement offer will remain open
until the later of thirty days (30) days following
the date of said notice or the date an adversary
proceeding is filed seeking recovery of the
preferential payment.

(d) The Notice will provide that if the election to
settle is made by a Creditor, that Creditor will not
be entitled to increase the amount of its Allowed
Unsecured Claim by the amount paid in settlement; and

26
<PAGE>

(e) The notice will constitute a formal demand for
payment, and that upon the filing of an adversary
proceeding to recover the preference, the Debtor will
seek to recover interest from the date of the demand.

In the event the Creditor alleged to have received a
Preference is an Insider, the Notice described above shall be issued by
the Committee.

In the event an adversary proceeding is instituted to recover
a Preference Claim, any proposed settlement shall be approved only in
accordance with the provisions of Bankruptcy Rule 9019.

The prosecution of Preference Claims against non-Insider
Creditors shall be the responsibility of the Debtor.

All proceeds derived from the prosecution of Preference Claims
shall be deposited in the Creditors' Fund, but will be separately
accounted for so that no portion of those proceeds will be paid to the
Class 7 Creditor.

D. RECOVERY ACTIONS. All Recovery Actions, other than Preference Claims
against non-Insiders, may be prosecuted on behalf of the Debtor by the
Committee. The Committee shall also have the responsibility of prosecuting
Preference Claims against Insiders in accordance with the procedures outlined in
Paragraph V(C)(i) above.

E. FUNDING.
1. LIQUIDATION BUDGET. Prior to the Confirmation hearing, the
Debtor shall submit a Liquidation Budget which shall be made a part of
the Plan. The Liquidation Budget shall describe in reasonable detail
all anticipated costs and

27
<PAGE>

expenses involved in the sale of Estate Property, including
professional fees and expenses of the Debtor other than fees and
expenses which may be attributable to the litigation of Recovery
Actions. Upon the Effective Date sufficient funds will be held in the
DIP account to fund the Liquidation Budget. The Liquidation Budget
shall be subject to modification from time to time, as circumstances
dictate, with the consent of the Bank Group. If the Liquidation Budget
does not appear sufficient to cover all reasonable costs and expenses
involved in the orderly liquidation of Estate Property and final
administration of this Bankruptcy Case, the Court may, after notice and
hearing, approve additions to the Budget and appropriate procedures for
funding such additions from the Net Proceeds of Asset Sales (up to a
maximum of $450,000, provided such additional charge to the Bank Group
is fair and equitable) or the Creditors' Fund.

2. COMMITTEE EXPENSE FUND. For the purpose of defraying the
Post-Confirmation expenses of the Committee, a separate interest
bearing account will be established and maintained by the Debtor into
which the sum of $50,000 will be deposited on the Effective Date. This
fund will be drawn against to pay expenses of the Committee for
professional fees as are approved by the Court.

3. CREDITORS' FUND. On the Effective Date the Creditors' Fund
will be established and maintained by the Debtor. The Creditors' Fund
will be funded from time to time by the following:

28
<PAGE>

(a) The Carve Out (which amount shall be deposited in the
Creditors' Fund on the Effective Date);

(b) Net proceeds from the sale of assets not encumbered
by liens; and

The Creditors' Fund will be utilized primarily for the purpose of
making distributions to Classes 6, 7 and, if applicable, 8. In
addition, the Creditors' Fund will serve as the source of payment of
that portion of professional fees and expenses incurred by the Debtor
post-confirmation with respect to Preference Claims and may serve as
the source of payment of other professional fees and expenses of the
Debtor as provided below. The Creditors' Fund will also serve as the
source of payment of approved fees and expenses of Committee
professionals attributable to the pursuit of Recovery Actions, other
than non-Insider preference claims, after the Committee Expense Fund
has been depleted. The Creditors' Fund may be used for the purpose of
paying Administrative Expenses only upon Court order entered after a
determination that the use of such funds is necessary and fair in order
to ensure the payment of such costs and expenses.

F. DISTRIBUTIONS.
--------------

29
<PAGE>

parameters of the Liquidation Budget. If outside the parameters of the
Liquidation Budget, said fees and expenses will be paid from the
Creditors' Fund. In any event, such fees and expenses shall be paid
only upon entry of an appropriate Court order approving same.

2. POST-CONFIRMATION COSTS AND EXPENSES. Following
Confirmation, the costs and expenses of administering the Estate, as
set forth in the Liquidation Budget, will be paid when due from funds
maintained by the Debtor or, in the case of professionals, in
accordance with applicable orders and procedures then in effect for the
payment of professional fees. It is the express purpose and intent of
the Plan that all reasonable costs and expenses of administering this
case shall be paid and appropriate provisions for such payment be made
prior to any distribution to Creditors from the Creditors' Fund.

3. SECURED TAX CLAIMS. Secured Tax Claims will be paid in full
in cash upon the sale of the property securing the Claim or within
twelve (12) months following the Effective Date, whichever occurs
first.

4. PRIORITY UNSECURED CLAIMS. The Debtor has scheduled a small
amount of priority employee related Claims which, if determined and
allowed, will be paid in full in cash from the Creditors' Fund on the
Effective Date. The Debtor is unaware of any pre-petition unsecured Tax
Claims. If any such Claim is determined and allowed, such taxing
authority will receive full payment prior to any distribution to

30
<PAGE>

general Unsecured Creditors in Class 6 or the Bank Group deficiency
claim in Class 7.

5. BANK GROUP SECURED CLAIM. On the Effective Date all funds
held by the Debtor in excess of the Liquidation Budget and the Carve
Out shall be paid to the Bank Group in partial satisfaction of its
Allowed Secured Claim. Thereafter, all Net Proceeds from the
realization, liquidation or sale of Estate Property which serves as the
Bank Group's collateral will be paid to the Bank Group.

6. UNSECURED CREDITOR CLAIMS. Unsecured Creditors (Classes 6
and 7) will receive pro rata distributions from the Creditors' Fund
upon entry of an order authorizing and approving the distribution after
the Final Claims Resolution Order has been entered, provided however,
that Class 7 shall not participate in the pro rata distributions of the
Net Proceeds derived from Preference Claims. Earlier distributions to
these Unsecured Creditors will occur only upon Court order issued after
notice and hearing. The Debtor, Bank Group and Committee each shall
have standing to file a motion seeking authorization for earlier,
partial distributions.

7. SHAREHOLDER INTERESTS. After all Creditors have been paid
in full, including the Bank Group on its deficiency claim and general
Unsecured Creditor Claims, any funds remaining will be distributed to
the shareholders of the Debtor in accordance with their percentage of
stock ownership in the Debtor.

G. ASSUMPTION AND REJECTION OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES.
----------------------------------------------------------------------

31
<PAGE>

Other than the Debtor's contract with Trigon Blue Cross Blue Shield
relating to claims administration and excess risk concerning the Debtor's
employee health insurance plan for 1999, all executory contracts which have not
previously been rejected by order of the Court or which are not the subject of a
pending motion to assume or reject as of the Confirmation Date, shall be deemed
rejected on the Effective Date.

H. DISCHARGE OF DEBTOR AND BANK GROUP RELEASE.
------------------------------------------

Pursuant to Section 1141(d)(3)(A), Confirmation of the Plan shall not
effect a discharge of the Debtor's liabilities. The Plan does provide that, in
consideration of the Carve Out and the funding of the Liquidation Budget,
Confirmation of the Plan shall have the effect of fully and forever discharging
the members of the Bank Group and their respective officers, directors,
shareholders, employees, agents and others from any and all claims, losses,
liabilities, demands, actions or causes of action of any kind or character that
the Debtor or the Estate may have against the Bank Group.

I. RETENTION OF JURISDICTION.
--------------------------

The Plan provides that the Bankruptcy Court will retain jurisdiction
over the business and assets of the Debtor until all Estate Property is
liquidated and the proceeds distributed in full. In other words, the Court shall
retain jurisdiction to the same extent and in the same manner as jurisdiction
existed prior to Confirmation of the Plan.

J. CANCELLATION OF CORPORATE CHARTER.
----------------------------------

32
<PAGE>

Upon entry of an appropriate order by the Court approving the final
distribution to Creditors and the Final Report filed by the Debtor, the
corporate charter of the Debtor shall be canceled.
VI.
CONFIRMATION AND CONSUMMATION PROCEDURE
---------------------------------------

On September 13, 1999, the Debtor filed a Motion seeking an order
providing for an expedited confirmation process which would include conditional
approval of the Disclosure Statement. Since the Plan contemplates a full
liquidation of the assets of the Debtor and contains provisions for
distributions to Creditors which are relatively uncomplicated, it was the
opinion of the Debtor that the time periods generally applicable in the
confirmation process, which could extend beyond sixty (60) days, could be
considerably shortened. Moreover, Section 105(d)(2)(B)(vi) indicates that the
Court may hold a hearing on the approval of the Disclosure Statement which can
be combined with the hearing on the Confirmation of the Plan. The Debtor's
Motion for an expedited confirmation process, which will be heard on September
30, 1999, requests that the Court conditionally approve the Disclosure Statement
and permit the submission of the Disclosure Statement and the Plan of
Reorganization to the Creditors and shareholders of the Debtor for voting. At a
Confirmation hearing to be established by order of the Court, the Court would
consider not only the adequacy of the Disclosure Statement, but also the
Confirmation of the Plan. ....In order to be approved, the Disclosure Statement
must contain "adequate information" which means information of a kind, and in
sufficient detail, as far as reasonably practicable in light

33
<PAGE>

of the nature and history of the Company and the condition of the Company's
books and records, that would enable a hypothetical reasonable investor typical
of holders of Claims or Interests of the relevant class to make an informed
judgment about the Plan.

The order approving the Disclosure Statement, conditionally or
otherwise, will also establish the date of the Confirmation hearing and will
establish a deadline for the filing of objections to Confirmation of the Plan.

Generally, all impaired Creditors and Interest Holders have the right
to vote on the Plan. In this case, the following classes are entitled to vote on
the Plan: Class 4 -- Gaston County Dye and Finishing Secured Claims; Class 5 --
Secured Claim of Bank Group; Class 6 -- General Unsecured Claims; Class 7 --
Bank Group Deficiency Claim; and Class 8-- Shareholders. All other classes of
Claims are treated by the Company as unimpaired. Holders of Impaired Claims
shall be entitled to vote if:

A. Such Claim has been timely filed against the Debtor in a
liquidated amount regardless of whether the Claim is the subject of an
objection filed by the Debtor. The Claim shall be allowed solely for
the purpose of voting on the Plan in the amount in which the Claim has
been filed or in such other amount as may be agreed upon by the holder
of such Claim and the Debtor;

34
<PAGE>

amount in which such Claim has been listed on the Debtor's schedules or
as may be agreed upon by the holder of such Claim and the Debtor;

C. Such Claim has been filed in an undetermined amount, in
which case the claimant shall not be entitled to vote unless the Debtor
and the holder of the Claim agree on an amount for voting purposes or
the Court enters an order determining the amount of the Claim that the
Creditor may vote;

D. Such Claim has been adjusted or reconciled for post
petition credits, in which case it shall be allowed for voting purposes
in a reduced amount consistent with such reconciliation after full
adjustment. In the event of a dispute over the remaining portion of the
Claim, subparagraph A will control;

E. Any entity holding a duplicate Claim shall be allowed to
vote only one Claim.

The requirements for Confirmation of the Plan are set forth in Section
1129 and will not be repeated verbatim here. A class of Claims is deemed to have
accepted the Plan if the Plan is accepted by Creditors who hold at least
two-thirds in dollar amount and more than one-half in number of the Allowed
Claims of such class which actually vote for acceptance or rejection of the
Plan. The class of Interests is deemed to have accepted the Plan if the Plan is
accepted by shareholders of the Debtor who hold at least two-thirds shares
voting for acceptance or rejection of the Plan. In the event a class votes to
reject the Plan, the Court cannot confirm the Plan unless it determines that,
with respect to the rejecting class, the Plan treatment is fair and equitable as
defined in Section 1129.

35
<PAGE>

VII

LIQUIDATION ANALYSIS
--------------------

The following is a comparative analysis of the advantages and
disadvantages of liquidating Pluma pursuant to a confirmed Chapter 11
Liquidation plan as opposed to the conversion of this Chapter 11 case to a case
under Chapter 7 and the resulting liquidation of assets and administration of
the Estate through a Chapter 7 case.

A. REALIZATION OF VALUE.
--------------------

1. CHAPTER 11. This Chapter 11 Liquidation Plan envisions an
orderly Liquidation of the Debtor's assets with the objective of maximizing the
value of the Estate. The Liquidation Plan provides for a run out of the Debtor's
existing work in process and a conversion of the work in process to finished
goods so that the goods can be shipped to fill existing orders. By doing so the
Debtor expects to maximize the value of its inventory, since work in process
would have virtually no value on the open market. Similarly, the Debtor is
negotiating with existing customers for the sale of large portions of the
Debtor's existing inventory at favorable prices. Hand in hand with the
conversion of work in process to finished goods, and the resulting sale to
existing customers is the resolution of outstanding accounts receivable. In
order to achieve these goals, the Liquidation Plan provides retention incentives
for certain officers and employees of the Debtor which are set forth in the
footnote to Exhibit B and on Exhibit F, attached hereto. These incentives are
provided for in the Liquidation Budget and funded by the Bank Group.

36
<PAGE>

The following chart represents expected recoveries under a Chapter 11
orderly liquidation versus a forced liquidation under Chapter 7. As the chart
demonstrates, the Debtor projects that recoveries on inventory and accounts
receivable will be at least $11.0 million greater through a Chapter 11
liquidation. Significant differences also exist in the value of real estate as
the sale of such property over time can reasonably be expected to bring more
than through an immediate forced sale.

37
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Chapter 11 Chapter 7
Assets (in 000's) Liquidation Liquidation
Sales Consummated Prior to September 24, 1999
Stardust Sale 10,437 10,437
Rocky Mount
Real Estate and Equipment 1,173 1,173
------ ------
TOTAL 11,610 11,610
...................................................................................................................
Remaining Real Estate
Altavista 126 126
Chatham Sewing 805 805
Beaver Creek 675 675
Eden Main 2,990 2,000
Eden Knitting 2,623 1,500
Martinsville Sewing 683 683
Vesta 280 280
--- ---
TOTAL 8,182 6,069

Remaining Equipment
Altavista 51 51
Beaver Creek
Chatham Sewing 192 192
Eden Main 2,104 1,400
Eden Knitting 457 300
Eden Sewing 61 61
Martinsville Dist. Ctr. 240 240
Martinsville Sewing 219 219
Vesta 129 129
--- ---
TOTAL 3,453 2,592
Accounts
Receivable (9/10/99) TOTAL 8,528 5,482
Inventory (9/10/99) TOTAL 16,825 8,868
------- -----

GROSS RECOVERY 36,988 23,011
Cash on Hand (9/16/99) 11,237 11,237
GROSS AVAILABLE 48,225 34,248

Liquidation Expenses and 8,048 2,000
Chapter 11 Admin. NA 1,200
...................................................................................................................
Net Available for Distribution to
Pre-Petition Creditors (including consummated sales) 51,787 42,658
</TABLE>

38
<PAGE>

2. CHAPTER 7 LIQUIDATION. Chapter 7 would appear to have no
benefits for Unsecured Creditors. No funds would be initially set aside
to benefit Unsecured Creditors. In addition, the Bank Group's $50.0
million unsecured deficiency claim would dwarf all other Unsecured
Claims such that, if amounts ultimately came available for distribution
to Unsecured Creditors, the Bank Group would receive an estimated
seventy-seven percent (77%) of such distributions. Furthermore,
virtually all property of the Bankruptcy Estate is encumbered by the
pre or post-petition liens granted to the Bank Group. It is clear that
the value of all of the Debtor's tangible property and accounts is
considerably less than the amount of the Bank Group's Secured Claim.
Accordingly, based on procedures now in effect for Chapter 7 cases
pending in the Middle District of North Carolina, a Chapter 7 Trustee
would not administer the liquidation of the Debtor's tangible property
and accounts as the Chapter 7 Estate would have no equity in the
property being sold. Either the Bank Group would be granted relief from
stay or the property would be abandoned. In either case, the Bank Group
would be responsible for liquidating the property outside bankruptcy.
However, whether the Bank Group liquidated the property directly, or a
Chapter 7 Trustee liquidated the property, considerable value would be
lost as the result of the unavoidable forced liquidation of the
property. Substantial inventory value would be lost both as the result
of a failure to convert work in process to finished goods and the
inability of a Chapter 7 Trustee or the Bank Group to utilize the
Debtor's existing resources to effectuate ongoing sales. Most likely,
an inventory

39
<PAGE>

liquidation specialist would be brought in to purchase the inventory in
bulk, resulting in substantial losses. Moreover, losses would likely
occur in the collection of accounts receivable in that the account
Debtor would no longer have an incentive to make an early settlement of
its account. In conclusion, it appears clear that considerably more
value will be realized from the sale of the Debtor's assets in a
Chapter 11 liquidation through a confirmed Plan than would be the case
under a Chapter 7 liquidation.

B. BENEFIT TO CREDITORS.

1. CHAPTER 11. Under the Chapter 11 Plan of Liquidation
significant benefits are granted to Unsecured Creditors which would not
be available under a Chapter 7 Liquidation. The Bank Group has agreed
to "carve out" $750,000.00 of Net Proceeds from the sale of its
collateral and to pay that amount into the Creditors' Fund which will
primarily benefit Unsecured Creditors. The $750,000.00 Carve Out,
representing five percent (5%) or more of the anticipated universe of
Allowed Unsecured Claims,(2) would not be available in a Chapter 7, as
the payment of the Carve Out would not otherwise be required. In
addition to the Carve Out, the Bank Group has agreed not to participate
in any distribution of Preference Claim recovery proceeds. This is
significant in that the Bank Group's deficiency claim, established

- -------------------
(2) Based on initial review of unsecured claims scheduled and timely filed, it
is anticipated that Class 6 claims would not exceed $14,750,000.000, exclu-
sive of rejection claims which might be subsequently filed.

40
<PAGE>

in the Plan at $50.0 million, represents approximately seventy-seven
percent (77%) of the expected total Unsecured Claims debt in the case.

2. CHAPTER 7. Chapter 7 would appear to have no increased
benefit for Unsecured Creditors. Furthermore, in a Chapter 7
liquidation there would likely be significant unpaid Chapter 11
Administrative Expenses including, most notably, unpaid insurance
benefits incurred by the Debtor's employees prior to the conversion of
the case but not otherwise paid during the Chapter 11. It is estimated
that this amount would be substantial, likely in excess of $1.2
million. In the Liquidation Budget to be used in connection with the
Chapter 11 Plan, $1,250,000.00 has been allocated for this particular
Administration Expense. Under Chapter 7, Chapter 11 Administrative
Expenses are entitled to priority in payment before any distribution is
made to General Unsecured Claims. Under a Chapter 7 Liquidation it
would thus appear most unlikely that Unsecured Creditors would receive
more than a minuscule dividend in the case. Under the Chapter 11
Liquidation Plan, on the other hand, it appears possible that Unsecured
Creditors will in fact receive a dividend on their Allowed Claims which
could exceed 10%.

C. BENEFIT TO EMPLOYEES.
---------------------

1. CHAPTER 11. Under the Chapter 11 Liquidation Plan certain
of the Company's employees will continue to work to wind down the
Debtor's business, thereby providing significant value in the
conversion of inventory to finished goods and the sale of assets.
Others will need to remain employed by the Company to

41
<PAGE>

furnish assistance in concluding the administration of the case. The
Bank Group has agreed to allow what is essentially a charge against its
collateral for the funding of the Liquidation Budget in order that
money will be available to cover the wind down expenses of the Company.

Both before and after the Chapter 11 filing, the Debtor
maintained a partially self funded insurance plan with Trigon Blue
Cross and Blue Shield ("Trigon"). Under this insurance plan the Debtor
was responsible for paying medical claims incurred by its employees and
covered under the plan subject to both specific and aggregate stop loss
or excess coverage provided by Trigon. Under the insurance plan there
exists a natural lag time between the time a claim is incurred and the
time it is reported for payment. Under the Chapter 11 Liquidation Plan,
the Debtor projects that sufficient funds have been set aside to cover
the Debtor's cost for paying the medical claims of its employees not
covered by the Trigon stop loss or reinsurance coverage. Finally, under
the Chapter 11 Liquidation Plan, there remains the possibility, however
remote, that substantial portions of the Debtor's assets might be sold
in bulk, thus providing similar employment opportunities for current
employees.

2. CHAPTER 7. If the case were converted to a Chapter 7, all
of the Debtor's remaining employees would immediately be terminated.
Similarly, conversion to Chapter 7 would result in the termination of
the Debtor's partially self-funded medical insurance reimbursement plan
described above. The termination of the plan might give rise to
substantial claims of employees for medical bills incurred

42
<PAGE>

during the Chapter 11 that remain unpaid at the time of the conversion.
Administrative Expenses might be filed by Trigon as well. Because the
Estate does not currently have unencumbered assets, it is quite likely
that these claims would remain unpaid, in whole or in part. The failure
of the Company to honor its obligations under the self funded medical
insurance plan could give rise to claims directly against the employees
by the medical provider. Accordingly, the interest of the Debtor's
employees would be best served through an orderly liquidation pursuant
to the Chapter 11 Plan of Liquidation.

D. EFFICIENCY IN THE ADMINISTRATION OF THE CASE.

The Chapter 11 Liquidation Plan provides procedures and mechanisms for
the disposition of Estate property, the pursuit of Recovery Actions and the
compliance with Court reporting requirements. The Plan delegates to the
Committee and its professional responsibility to investigate and instigate
Recovery Actions, exclusive of Preference Claims against non-insiders, that the
Committee deems appropriate. The Debtor's professionals are given the
responsibility of administering and overseeing the liquidation of Estate assets,
the reconciliation of Creditor Claims and the pursuit of Preference Actions
against non-insiders. Because of the familiarity with the Debtor, its operations
and personnel, both the Committee and the Debtor are ideally situated to
administer the case to a conclusion with their respective responsibilities as
outlined above. Under the Chapter 11 Plan all of these matters can coincide with
the liquidation of Estate assets such that, absent the institution of
significant litigation matters, this case might be brought to an efficient and
expeditious conclusion.

43
<PAGE>

Whether professionals engaged by the Committee and the Debtor would charge more
or less for their services than a Chapter 7 Trustee, attorney and accountant
would charge is perhaps subject to debate. However, all fees of professionals
will remain subject to the reasonableness requirement mandated by the Bankruptcy
Code and will be subject to approval or disapproval by order of the Court. The
Debtor does believe that the liquidation of the Debtor's Estate in a manner
agreed upon by all concerned parties, as set forth in the Liquidation Plan, will
occur with far greater efficiency than would occur under Chapter 7.

VIII

PROJECTED CASH DISBURSEMENTS FROM THE LIQUIDATION BUDGET
--------------------------------------------------------

The professionals for the Bank Group have performed certain analyses
projections with reference to the liquidation process which has resulted in
preparation of a document entitled Pluma, Inc. -- Projected Chapter 11 Winddown
& Liquidation is attached hereto as Exhibit B. Exhibit B tentatively projects
total cash disbursements of $6,800,000.00 and liquidation costs of $1,038,000.00
for total cash expenditures in the liquidation process of $7,838,000.00. The
Debtor, on the other hand, has projected total cash disbursements during the
course of the liquidation of $8,048,000.00. See Exhibit C. Consequently, there
is a variance of less than 3% between the projections of management of the
Debtor and the professionals for the Bank Group. Exhibit D attached hereto
provides the detail for the salaries, wages and benefits listed on Exhibit C as
$3,960,000.00. Exhibit E, attached hereto, itemizes the $365,000.00 estimated
for professional fees in Exhibit C.

44
<PAGE>

ATTACHMENTS OF SPECIFIC INFORMATION
-----------------------------------

Attached to this Disclosure Statement as Exhibits are the following documents:

Exhibit A: Comparative Balance Sheets reflecting the Debtor's status
as of year end 1998 and as of the end of the second quarter
1999. The information set forth on this Exhibit is a
compilation of the balance sheets which were attached to the
Form 10K for the fiscal year ended December 31, 1998 and the
Form 10-Q for the quarter ending June 30, 1999, filed with the
Securities and Exchange Commission. Specific reference is made
to the Form 10-K and Form 10-Q for the information set forth
in the footnotes to the respective balance sheets and
management's discussion and analysis of financial condition
and results of operations.

Exhibit B: The tentative Liquidation Budget as prepared by The
Recovery Group, the Bank Group's financial consultant covering
the period from the week ending September 17, 1999 through the
week ending December 10, 1999.

Exhibit C: Debtor's Tentative Projected Summary of Disbursements.

Exhibit D: Debtor's Projected Salaries, Wages, and Benefits.

Exhibit E: Debtor's Projected Professional Fees.

Exhibit F: Employee Stay Incentives/Severance. (see also the footnote on
Exhibit B)

Exhibit G: Debtor's Plan of Liquidation. [If the Plan is served as a
separate document together with this Disclosure Statement,
Exhibit G will not be attached.]

45
<PAGE>

CONCLUSION
Based on the foregoing analysis of the Company, its liquidation, and
the Plan of Liquidation, the Debtor believes that the best interests of all
parties would be served through confirmation of the Plan and the Company's
solicits your support thereof.

[THE REST OF THIS PAGE IS INTENTIONALLY BLANK]

46
<PAGE>

Respectfully submitted this the ______ day of September, 1999.

PLUMA, INC.

By: ________________________________________________
John Wigodsky, President/Chief Executive Officer

- --------------------------------------------
R. Bradford Leggett
North Carolina State Bar No. 2697
C. Edwin Allman, III
North Carolina State Bar No. 8625
M. Joseph Allman
North Carolina State Bar No. 13395
Attorneys for Debtor

ALLMAN SPRY LEGGETT & CRUMPLER, P.A.
380 Knollwood Street, Suite 700
Post Office Drawer 5129
Winston-Salem, NC 27113-5129
Telephone: 336/722-2300
Telecopier: 336/722-8720

47
<PAGE>

EXHIBITS

EXHIBIT 2.3

UNITED STATES BANKRUPTCY COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
GREENSBORO DIVISION

IN RE: )
)
PLUMA, INC., ) CASE NUMBER B-99-11104C-11G
)
DEBTOR. )
- --------------------------- )

DEBTOR'S SECOND MODIFICATION TO PLAN OF LIQUIDATION
---------------------------------------------------

Pluma, Inc., Debtor ("Debtor") in the above-entitled case, by and
through counsel, pursuant to the provisions of ss.1127(a) of the Bankruptcy Code
does herewith further modify its Modified Plan of Liquidation (the "Plan") filed
herein on October 5, 1999 in the following respects and in those respects only:

1. Paragraph 3.3 relating to Class 3 - Tax Claims is deleted in
its entirety.

2. In lieu of the former Paragraph 3.3 of the Plan, the following
Paragraphs 3.3(a) and 3.3(b) are inserted;

3.3(A) CLASS 3(A) - SECURED TAX CLAIMS:
------ --------------------------------

(A) CLASSIFICATION: Class 3(a) shall consist of allowed
tax claims secured by real estate.

(B) IMPAIRMENT: Class 3(a) claims are not impaired.

(C) TREATMENT: All tax claims secured by real estate
shall be paid in full in cash upon the sale of such real estate. If a
sale of the collateral for the secured tax claim has not occurred
within twelve (12) months following the Effective Date, a public
auction of said real estate shall be conducted within the thirteenth

<PAGE>

month (13) following the Effective Date and the secured tax claim shall
be paid from the proceeds of the sale of the real estate securing said
tax claim.

3.3(B) CLASS 3(B) - UNSECURED PRIORITY TAX CLAIMS:
------ -------------------------------------------

A. CLASSIFICATION: Class 3(b) shall consist of all claims of
governmental units entitled to priority pursuant to the
provisions of ss.507(a)(8) of the Bankruptcy Code.

B. IMPAIRMENT: Class 3(b) claims are not impaired.

C. TREATMENT: The holders of all Class 3(b) tax claims will
receive on account of such claim deferred cash payments,
over a period not exceeding two (2) years after the
Effective Date, of a value, as of the Effective Date of the
Plan, equal to the allowed amount of such claim.

Respectfully submitted this the 9th day of November, 1999.

-----------------------------------
R. Bradford Leggett
North Carolina State Bar No: 2697
Attorney for Debtor

OF COUNSEL:

ALLMAN SPRY LEGGETT & CRUMPLER, P.A.
380 Knollwood Street, Suite 700
Post Office Drawer 5129
Winston-Salem, NC 27113-5129
Telephone: (336) 722-2300
Facsimile: (336) 722-8720

2
<PAGE>

CERTIFICATE OF SERVICE
----------------------

The undersigned does hereby certify that on this date he caused to be
served a copy of the DEBTOR'S MODIFICATION TO PLAN OF LIQUIDATION on the persons
set forth below by depositing copies of said documents in the United States
mail, first-class postage prepaid, addressed as follows:

David L. Eades, Esquire Michael D. West, Esquire
Moore & Van Allen, PLLC Bankruptcy Administrator
NationsBank, Agent Bank Middle District of North Carolina
100 N. Tryon Street, Floor 47 Post Office Box 1828
Charlotte, NC 28202-4003 Greensboro, NC 27402

David Grogan, Esquire
Blair Conaway Bograd & Martin, P.A.
221 South Tryon Street
Charlotte, NC 28202-3247

This the ____ day of October, 1999.

---------------------------------
R. Bradford Leggett
North Carolina State Bar No. 2697
Attorney for Debtor

OF COUNSEL:

ALLMAN SPRY LEGGETT & CRUMPLER, P.A.
380 Knollwood Street, Suite 700
Post Office Drawer 5129
Winston-Salem, NC 27113-5129
Telephone: (336) 722-2300
Facsimile: (336) 722-8720

EXHIBIT 2.4

UNITED STATES BANKRUPTCY COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
GREENSBORO DIVISION

IN RE: )
)
PLUMA, INC., ) CASE NUMBER B-99-11104C-11G
)
DEBTOR. )
- ---------------------------)

DEBTOR'S MODIFICATION TO DISCLOSURE STATEMENT
---------------------------------------------

Pluma, Inc., Debtor ("Debtor") in the above-entitled case, by and
through counsel, by virtue of modifications made to its Plan of Liquidation
pursuant to the provisions of ss.1127(a) of the Bankruptcy Code, does herewith
modify its Disclosure Statement filed herein on September 24, 1999 in the
following respects and in those respects only:

1. The reference on Page 21 of the Disclosure Statement to Class III -
Tax Claims and the reference on Page 31 of the Disclosure Statement to Secured
Tax Claims are deleted and the following is inserted in their stead:

"All Tax Claims secured by real estate shall be paid in full
in cash upon the sale of such real estate. If a sale has not
occurred within twelve (12) months following the Effective
Date, the taxing authority may pursue its statutory remedies
against any property which is subject to the tax lien of such
taxing authority."

2. On Page 24 of the Disclosure Statement, the second sentence in
Paragraph B.1. is deleted and the following sentence is substituted:

<PAGE>

"The Debtor, with the consent of the Bank Group
Representative, shall be free to consummate any sales of
personal property which is subject to the Bank Group's lien,
outside the ordinary course of its business without further
notice, hearing or Court order."

3. On Page 27 of the Disclosure Statement, subparagraph C(1)(d) is
deleted.

4. On Page 28 - 29 of the Disclosure Statement the provisions relating
to the Committee Expense Fund are deleted and the following is inserted:

"For the purpose of defraying the post-Confirmation expenses
of the Committee, a separate interest bearing account will be
established and maintained by the Debtor into which the sum of
Fifty Thousand Dollars ($50,000) will be initially deposited
on the Effective Date. (The "Initial Deposit"). To the extent
that the Court approves post-Confirmation professional fees
and expenses of the Committee in excess of the Initial Deposit
in the aggregate, the Bank Group shall deposit additional
funds into the Committee Expense Fund to pay for such fees and
expenses, up to a maximum additional amount of Fifty Thousand
Dollars ($50,000) (the "Supplemental Deposit"). The Bank Group
shall be reimbursed for all funds advanced as a Supplemental
Deposit from the first proceeds of Recovery Actions (other
than Preference Actions) otherwise available for distribution
to Classes VI and VII. The Initial Deposit is not refundable."

5. On Page 28, of the Disclosure Statement, Paragraph E.1. LIQUIDATION
BUDGET, the fourth sentence of this section will be deleted and the following
inserted in its stead:

"The Liquidation Budget shall be subject to modification from
time to time, as circumstances dictate, with the consent of
the Bank Group, and, to the extent that such modification
would result in additional charges being made to the
Creditors' Fund, with the consent of the Committee."

2
<PAGE>

6. On the chart set forth on Page 38 of the Disclosure Statement, the
amount of liquidation expenses under a Chapter 11 liquidation is changed to
8,098 and the net available for distribution to pre-petition creditors is
changed to 51,737.

7. On Page 44 of the Disclosure Statement in Section VIII the amount
set forth in the third sentence is changed from $8,048,000 to $8,098,000 and the
amount set forth in the last sentence of Section VIII is changed from $365,000
to $415,000. This modification is occasioned by an increase in the funds
projected to be paid to Committee professionals from $50,000 to $100,000.
Because of changes in the projection for Committee professional fees, Exhibits C
and E attached to the Disclosure Statement are replaced by Exhibits C and E
attached hereto and incorporated herein by reference.

Contemporaneously with the filing of these modifications, the Debtor is
filing a Modified Disclosure Statement which contains the modifications set
forth herein.

Respectfully submitted this the ___ of October, 1999.

----------------------------------
R. Bradford Leggett
North Carolina State Bar No: 2697
Attorney for Debtor

OF COUNSEL:

ALLMAN SPRY LEGGETT & CRUMPLER, P.A.
380 Knollwood Street, Suite 700

3
<PAGE>

Post Office Drawer 5129
Winston-Salem, NC 27113-5129
Telephone: (336) 722-2300
Facsimile: (336) 722-8720

4
<PAGE>

CERTIFICATE OF SERVICE

The undersigned does hereby certify that on this date he caused to be
served a copy of the DEBTOR'S MODIFICATION TO DISCLOSURE STATEMENT on the
persons set forth below by depositing copies of said documents in the United
States mail, first-class postage prepaid, addressed as follows:

David Grogan, Esquire
Blair Conaway Bograd & Martin, P.A.
221 South Tryon Street
Charlotte, NC 28202-3247

This the ____ day of October, 1999.

---------------------------------
R. Bradford Leggett
North Carolina State Bar No. 2697
Attorney for Debtor

OF COUNSEL:

ALLMAN SPRY LEGGETT & CRUMPLER, P.A.
380 Knollwood Street, Suite 700
Post Office Drawer 5129
Winston-Salem, NC 27113-5129
Telephone: (336) 722-2300
Facsimile: (336) 722-8720

EXHIBIT 2.5

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
GREENSBORO DIVISION

IN RE: )
)
)
PLUMA, INC. ) CASE NUMBER B-11104C-11G
)
)
DEBTOR. )

________________________________________________________________________________

DEBTOR'S MODIFIED DISCLOSURE STATEMENT

OCTOBER 5, 1999

________________________________________________________________________________

TABLE OF CONTENTS

<PAGE>

<TABLE>
<CAPTION>
<S> <C> <C>
I. INTRODUCTION..................................................................................................1

<PAGE>

E. Funding ..............................................................................28
1. Liquidation Budget ..........................................................28
2. Committee Expense Fund ......................................................28
3. Creditors' Fund .............................................................29
F. Distributions ........................................................................30
1. Administrative Expenses .....................................................30
2. Post-Confirmation Costs and Expenses ........................................30
3. Secured Tax Claims ..........................................................31
4. Priority Unsecured Claims ...................................................31
5. Bank Group Secured Claim ....................................................31
6. Unsecured Creditor Claims ...................................................32
7. Shareholder Interests .......................................................32
G. Assumption and Rejection of Executory Contracts
And Unexpired Leases ........................................................32
H. Discharge of Debtor and Bank Group Release ...........................................33
I. Retention of Jurisdiction ............................................................33
J. Cancellation of Corporate Charter ....................................................33

VI. CONFIRMATION AND CONSUMMATION PROCEDURE......................................................................33

VII. LIQUIDATION ANALYSIS........................................................................................36
A. Realization of Value..................................................................37
1. Chapter 11 ..................................................................37
2. Chapter 7 Liquidation .......................................................40
B. Benefit to Creditors..................................................................41
1. Chapter 11 ..................................................................41
2. Chapter 7 ...................................................................42
C. Benefit to Employees..................................................................42
1. Chapter 11 ..................................................................42
2. Chapter 7 ...................................................................43
D. Efficiency in the Administration of the Case..........................................44

VIII. PROJECTED CASH DISBURSEMENTS
FROM THE LIQUIDATION BUDGET ............................................................................45

IX. ATTACHMENTS OF SPECIFIC INFORMATION .........................................................................46

X. CONCLUSION....................................................................................................47
</TABLE>

iii

<PAGE>

MODIFIED DISCLOSURE STATEMENT TO DEBTOR'S PLAN OF LIQUIDATION

PLUMA, INC., Debtor in the above-entitled Chapter 11 case (hereinafter
sometimes referred to as the "Company" or "Pluma" or the "Debtor"), submits the
following Modified Disclosure Statement pursuant to Section 1125 of the
Bankruptcy Code(1)to Creditors and shareholders of the Debtor in connection with
the solicitation of acceptances or rejections of its Plan of Liquidation dated
September 24, 1999 and modified October 5, 1999 (the "Plan"), a copy of which is
attached hereto as Exhibit G. Unless otherwise defined herein, all capitalized
terms contained herein shall have the meanings ascribed to them in the Plan.

I.
INTRODUCTION

- -----------------
(1)References to "Section _____" herein shall refer to a Section of the
Bankruptcy Code, 11 U.S.C.ss.101, et seq.

iv
<PAGE>

2
<PAGE>

UNABLE TO REPRESENT OR WARRANT THAT THE INFORMATION CONTAINED HEREIN IS WITHOUT
ANY INACCURACY.

3
<PAGE>

confirmation of the Plan is in the best interests of Creditors and other parties
in interest and recommends acceptance of the Plan.

II.
BUSINESS AND STRUCTURE OF THE DEBTOR AND
EVENTS LEADING TO CHAPTER 11

A. STRUCTURE

Pluma, Inc. is a publicly traded corporation and its common
stock was, until May, 1999, traded on the New York Stock Exchange under the
symbol PLU. As of March 29, 1999, there were approximately 233 shareholders of
record and 8,109,152 shares of common stock outstanding.

B. HISTORY

Pluma was incorporated on December 1, 1986 by a group of
individuals who at the time had over one hundred (100) years of collective
industry experience. The founders envisioned that the Company could produce high
quality activewear cost effectively and sell to a more diverse customer base
than was common in the industry. The Company fashioned itself an industry leader
in the development of new products and styles while at the same time also
establishing higher quality standards. The Company was one of the first to
introduce heavy weight fuller cut fleece products at attractive price points and
fleece wear with higher cotton content. These products were well received by
customers and the Company rapidly increased sales and profitability as it
expanded its business across broad market segments. In 1990 the Company began to
produce heavy weight cotton jersey products suitable for

4
<PAGE>

outerwear thus diversifying its product mix and more efficiently utilizing its
manufacturing base. By 1997 the Company had continued to be a leading innovator
of products introducing pique' fleece, 100% cotton fleece and
cotton/Spandex(TM) five way stretch fleece.

5
<PAGE>

C. EVENTS LEADING TO THE CHAPTER 11 FILING.

6
<PAGE>

result of these events, the Company's third quarter 1997 earnings fell
significantly below expectations.

7
<PAGE>

8
<PAGE>

realize the full benefit of these relationships due to quality problems and the
failure of these manufacturers to provide product in a timely manner.

9
<PAGE>

10
<PAGE>

The Company also implemented changes to its senior management
team. On January 31, 1999, Ronald A. Norelli, Vice Chairman and an outside
member of the Board of Directors, was appointed as Pluma's interim Chief
Executive Officer. Shortly thereafter, the Company's President and former Chief
Executive Officer announced his resignation. On March 8, 1999, the Company put
in place a new Chief Financial Officer, William H. Watts, and on May 10, 1999,
it appointed John D. Wigodsky as its permanent President and Chief Executive
Officer.
Despite Pluma's continuing efforts to reduce costs, the
Company was unable to resolve its liquidity shortfall. In the second quarter of
1999, tighter supplier restrictions, the erosion of the Company's borrowing base
due to certain uncollectible accounts receivable of FLR, and the bankruptcy of a
major customer exacerbated an already severe cash crisis. On May 14, 1999, the
Company filed its petition under Chapter 11 of the United States Bankruptcy
Code.
D. BUSINESS LOCATIONS AND PROPERTY.

LOCATION SQUARE FOOTAGE OWNERSHIP OPERATIONS USE
- ------------------------ ---------------------- ---------------------- ---------------------- ----------------------

</TABLE>

11
<PAGE>

COMMENCED
----------------------
<S> <C> <C> <C> <C>

Eden, NC 170,900 Owned 1987 Executive offices,
dyeing, finishing
and cutting

Eden, NC 139,169 Owned 1993 Knitting and yarn
storage

Eden, NC 20,600 Leased 1996(1) Outlet Store

Eden, NC 18,000 Leased 1987(2) Sewing

Martinsville, VA 198,000 Leased 1996 Distribution and
warehouse

Martinsville, VA 181,600 Leased 1988 Distribution,
packaging and
warehouse

Martinsville, VA 83,200 Leased 1994(7) Distribution,
packaging and
management
information systems

Martinsville, VA 43,900 Owned 1988 Sewing

Martinsville, VA 15,600 Leased 1992(3) Storage

Martinsville, VA 11,500 Leased 1997(1) Product
Development and
Outlet Store

Martinsville, VA 8,300 Owned 1997 Marketing and sales
office and some
executive offices

Rocky Mount, VA 82,000 Owned 1995(4) Sewing

Chatham, VA 52,000 Owned 1990 Sewing

Vesta, VA 24,000 Owned 1994(5) Sewing

Altavista, VA 2,200 Leased 1997(1) Outlet store

Los Angeles, CA 139,500 Leased 1997(6) Distributor

Verona, WI 63,000 Owned 1997 Distributor

</TABLE>

(3) This lease terminated February 12, 1999.

12
<PAGE>

(4) Sewing operations ceased at this facility in April 1999 and the Company
sold this property by an absolute auction in August of 1999.

(5) The Company exercised its option to purchase this property in October
1997.

(6) The Company began the process of closing this facility in March 1999.
The lease for this facility was rejected by order of the Bankruptcy
Court on June 23, 1999.

[THE REST OF THIS PAGE IS INTENTIONALLY BLANK]

13
<PAGE>

III.

OPERATIONS DURING CHAPTER 11

A. APPOINTMENT OF COMMITTEES AND RETENTION OF PROFESSIONALS.

B. SIGNIFICANT POST-PETITION EVENTS.

During the course of this Chapter 11 case a number of events
occurred which were of significance. These are summarized as follows:

14
<PAGE>

without the use of proceeds from the collection of its accounts
receivable which were pledged to the Bank Group and which constitute
the Bank Group's cash collateral.

Contemporaneously with the filing of its bankruptcy petition,
the Company filed a motion seeking authority to use cash collateral in
the ordinary course of its business and the Company proposed to
adequately protect the Bank Group's interests by granting to the Bank
Group a replacement lien on post-petition assets to the extent cash
collateral was consumed in the Company's operations. On May 17, 1999
the Bank Group and the Company reached an agreement on the Company's
use of the Bank Group's cash collateral and an order approving the
agreement was entered by the Court on a preliminary basis. A final
hearing was scheduled for early June. The Court order approving the
Company's use of cash collateral contained an operational budget and
required the Company to maintain certain levels of accounts receivable
and inventory (the "Borrowing Base"). From the beginning the Company
experienced difficulty in complying with the Borrowing Base
restrictions in the cash collateral order. Faster than anticipated
collection of accounts, write downs of inventory to appropriate levels
to reflect the lower of cost or market and the aging of existing
accounts receivable created a continual erosion of the Borrowing Base
and made compliance with the cash collateral order difficult for the
Company.

15
<PAGE>

The failure of the Company to obtain a longer term
DIP Facility adversely affected its ability to obtain trade credit from
its suppliers. Perhaps more importantly, the Company's customers,
concerned about the Company's operational viability given its lack of
financing, were reluctant to submit orders for future sales. As a
result, without having a sufficient number of booked sales, the
Company's ability to obtain exit financing in amounts necessary to fund
a reorganization plan vanished.

16
<PAGE>

companies that manufactured finished goods for the Debtor for resale to
the Debtor's customers.

17
<PAGE>

continue. Had these payments not been made, the Company believes that
the losses it would have incurred would have been substantially greater
than the amounts paid to the non-domestic contractors.

5. JULY 1999 PROFIT. In July, 1999 the measures previously
implemented by management which reduced overhead and improved plant
efficiency resulted in net consolidated income (earnings before
interest and taxes) of $335,000. July, 1999 thus became the first
profitable month for the Company since early in 1998.

6. EXIT FINANCING. From the beginning of this case, the
Company made continuous and diligent efforts to secure outside
financing in order to fund a Plan of reorganization. Such a plan would
have been premised upon the write down

18
<PAGE>

The Debtor's ability to secure an equity investment
was made difficult by an its inability to demonstrate a consistent
profitability. The Debtor did develop a business plan that projected
profitable operations during calendar year 2000. However, the Plan also
projected an operational shortfall for the remainder of 1999, for which
the company would need sufficient working capital in order to
compensate for the projected losses and still remain a viable business
concern. Prospective lenders, rightly concerned about the projected
losses, insisted that sufficient availability remain on any proposed
loan to cover the shortfalls. This requirement, in turn, reduced the
amount that would be available for payment to the Bank Group under a
plan, thus making reorganization difficult without significant new
equity investment in the Company. Although considerable effort was
expended in attempts to locate new investors, none were forthcoming.
The failure to secure new equity together with the inability to book a
sufficient volume of future sales from new or existing customers
ultimately proved to be fatal to the Company's ability to continue as a
going concern.

7. DISCONTINUANCE OF OPERATIONS. Following extended
negotiations with the Bank Group concerning financing and after exhausting the
prospects of the sale of part

19
<PAGE>

IV.

SUMMARY OF THE PLAN THE

A. CLASSIFICATION AND TREATMENT OF CLAIMS.

The Plan divides the Claims into classes, sets forth the treatment
afforded to each class, and states whether such class is impaired or
unimpaired. A summary of the treatment of the seven classes of Claims
in the Plan and one class of Interests is as follows: 1.
CLASS 1 - ADMINISTRATIVE EXPENSES. Administrative Expenses generally
consist of debts incurred in the ordinary course of the Debtor's

20
<PAGE>

3. CLASS 3 - TAX CLAIMS. All Tax Claims secured by real estate
shall be paid in full in cash upon the sale of such real estate. If a
sale has not occurred within twelve (12) months following the Effective
Date, the taxing authority may pursue its statutory remedies against
any property which is subject to the tax lien of such taxing authority.

21
<PAGE>
5. CLASS 5 - SECURED CLAIM OF THE BANK GROUP. This Class
consists of the pre-petition Secured Claim of the Bank Group, which is
impaired. The Bank Group, after the funding of the Carve Out and the
Liquidation Budget shall receive all of the Net Proceeds from the
post-petition realization, sale or disposition of Estate Property on
which the Bank Group holds a perfected lien. Payment to the Class 5
Creditor shall be limited to distributions from realizations on assets
which serve as collateral for the Bank Group's Allowed Secured Claim.
The Bank Group deficiency claim shall be a Class 7 Unsecured Claim.

22
<PAGE>

IMPLEMENTATION OF THE PLAN

B. ASSET SALES. With respect to the sale of assets following
Confirmation, the following procedures shall apply:

23
<PAGE>

1. SALES OF PERSONAL PROPERTY. In winding down its business
operations, the Debtor may continue to sell inventory in the ordinary
course of its business. The Debtor, with the consent of the Bank Group
Representative, shall be free to consummate any sales of personal
property which is subject to the Bank Group's lien, outside the
ordinary course of its business without further notice, hearing or
Court order. Further, with the consent of the Bank Group
Representative, the Debtor may engage, as necessary or desirable, one
or more auctioneers, brokers or sales agents, upon three business days
notice to the Bankruptcy Administrator, which notice shall disclose the
proposed agent's contacts with the Debtor, the compensation to be paid
to such agent and whether such agent has agreed to share its
compensation with any other party. Unless objection is raised in
writing by the Bankruptcy Administrator and received by the Debtor
within three business days, such agent's engagement shall be deemed
approved without the need for formal application, notice or hearing. If
written objection is received by the Debtor, and not subsequently
waived, the terms and conditions of any such employment shall be
subject to approval of the Court.

24
<PAGE>

C. CAUSES OF ACTION.

25
<PAGE>

(a) Notice of the amount of the Preference Claim and a
particular description of the basis therefor;

(b) A request that the Creditor provide the Debtor with
information in writing which would constitute a
complete or partial defense to the Preference Claim
asserted;

(d) The notice will constitute a formal demand for
payment, and that upon the filing of an adversary
proceeding to recover the preference, the Debtor will
seek to recover interest from the date of the demand.

In the event the Creditor alleged to have received a
Preference is an Insider, the Notice described above shall be issued by
the Committee.

26
<PAGE>

In the event an adversary proceeding is instituted to recover
a Preference Claim, any proposed settlement shall be approved only in
accordance with the provisions of Bankruptcy Rule 9019.

The prosecution of Preference Claims against non-Insider
Creditors shall be the responsibility of the Debtor.

27
<PAGE>

E. FUNDING.

1. LIQUIDATION BUDGET. Prior to the Confirmation hearing, the
Debtor shall submit a Liquidation Budget which shall be made a part of
the Plan. The Liquidation Budget shall describe in reasonable detail
all anticipated costs and expenses involved in the sale of Estate
Property, including professional fees and expenses of the Debtor other
than fees and expenses which may be attributable to the litigation of
Recovery Actions. Upon the Effective Date sufficient funds will be held
in the DIP account to fund the Liquidation Budget. The Liquidation
Budget shall be subject to modification from time to time, as
circumstances dictate, with the consent of the Bank Group, and, to the
extent that such modification would result in additional charges being
made to the Creditors' Fund, with the consent of the Committee. If the
Liquidation Budget does not appear sufficient to cover all reasonable
costs and expenses involved in the orderly liquidation of Estate
Property and final administration of this Bankruptcy Case, the Court
may, after notice and hearing, approve additions to the Budget and
appropriate procedures for funding such additions from the Net Proceeds
of Asset Sales (up to a maximum of $450,000, provided such additional
charge to the Bank Group is fair and equitable) or the Creditors' Fund.

2. COMMITTEE EXPENSE FUND. For the purpose of defraying the
post-Confirmation expenses of the Committee, a separate interest
bearing account will be established and maintained by the Debtor into
which the sum of Fifty Thousand

28
<PAGE>

Dollars ($50,000) will be initially deposited on the Effective Date.
(The "Initial Deposit"). To the extent that the Court approves
post-Confirmation professional fees and expenses of the Committee in
excess of the Initial Deposit in the aggregate, the Bank Group shall
deposit additional funds into the Committee Expense Fund to pay for
such fees and expenses, up to a maximum additional amount of Fifty
Thousand Dollars ($50,000) (the "Supplemental Deposit"). The Bank Group
shall be reimbursed for all funds advanced as a Supplemental Deposit
from the first proceeds of Recovery Actions (other than Preference
Actions) otherwise available for distribution to Classes VI and VII.
The Initial Deposit is not refundable.

3. CREDITORS' FUND. On the Effective Date the Creditors' Fund
will be established and maintained by the Debtor. The Creditors' Fund
will be funded from time to time by the following:

(a) The Carve Out (which amount shall be deposited in the
Creditors' Fund on the Effective Date);

(b) Net proceeds from the sale of assets not encumbered by
liens; and

29
<PAGE>

below. The Creditors' Fund will also serve as the source of payment of
approved fees and expenses of Committee professionals attributable to
the pursuit of Recovery Actions, other than non-Insider preference
claims, after the Committee Expense Fund has been depleted. The
Creditors' Fund may be used for the purpose of paying Administrative
Expenses only upon Court order entered after a determination that the
use of such funds is necessary and fair in order to ensure the payment
of such costs and expenses.

F. DISTRIBUTIONS.

1. ADMINISTRATIVE EXPENSES. On the Effective Date all
Administrative Expenses will be paid in full from cash retained by the
Debtor in the DIP account. The fees and expenses of court approved
professionals rendering services pre-confirmation shall be paid from
funds maintained in the DIP account, if within the parameters of the
Liquidation Budget. If outside the parameters of the Liquidation
Budget, said fees and expenses will be paid from the Creditors' Fund.
In any event, such fees and expenses shall be paid only upon entry of
an appropriate Court order approving same.

30
<PAGE>

all reasonable costs and expenses of administering this case shall be
paid and appropriate provisions for such payment be made prior to any
distribution to Creditors from the Creditors' Fund.

3. SECURED TAX CLAIMS. All Tax Claims secured by real estate
shall be paid in full in cash upon the sale of such real estate. If a
sale has not occurred within twelve (12) months following the Effective
Date, the taxing authority may pursue its statutory remedies against
any property which is subject to the tax lien of such taxing authority.

6. UNSECURED CREDITOR CLAIMS. Unsecured Creditors (Classes 6
and 7)

31
<PAGE>

will receive pro rata distributions from the Creditors' Fund upon entry
of an order authorizing and approving the distribution after the Final
Claims Resolution Order has been entered, provided however, that Class
7 shall not participate in the pro rata distributions of the Net
Proceeds derived from Preference Claims. Earlier distributions to these
Unsecured Creditors will occur only upon Court order issued after
notice and hearing. The Debtor, Bank Group and Committee each shall
have standing to file a motion seeking authorization for earlier,
partial distributions.

G. ASSUMPTION AND REJECTION OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES.

H. DISCHARGE OF DEBTOR AND BANK GROUP RELEASE.

32
<PAGE>

the effect of fully and forever discharging the members of the Bank Group and
their respective officers, directors, shareholders, employees, agents and others
from any and all claims, losses, liabilities, demands, actions or causes of
action of any kind or character that the Debtor or the Estate may have against
the Bank Group.

I. RETENTION OF JURISDICTION.

J. CANCELLATION OF CORPORATE CHARTER.

Upon entry of an appropriate order by the Court approving the final
distribution to Creditors and the Final Report filed by the Debtor, the
corporate charter of the Debtor shall be canceled.

VI.

CONFIRMATION AND CONSUMMATION PROCEDURE

33
<PAGE>

Moreover, Section 105(d)(2)(B)(vi) indicates that the Court may hold a hearing
on the approval of the Disclosure Statement which can be combined with the
hearing on the Confirmation of the Plan. The Debtor's Motion for an expedited
confirmation process, which will be heard on September 30, 1999, requests that
the Court conditionally approve the Disclosure Statement and permit the
submission of the Disclosure Statement and the Plan of Reorganization to the
Creditors and shareholders of the Debtor for voting. At a Confirmation hearing
to be established by order of the Court, the Court would consider not only the
adequacy of the Disclosure Statement, but also the Confirmation of the Plan.
In order to be approved, the Disclosure Statement must contain "adequate
information" which means information of a kind, and in sufficient detail, as far
as reasonably practicable in light of the nature and history of the Company and
the condition of the Company's books and records, that would enable a
hypothetical reasonable investor typical of holders of Claims or Interests of
the relevant class to make an informed judgment about the Plan.

34
<PAGE>

B. Such Claim has been listed on the Debtor's schedules other
than as contingent, unliquidated or disputed and as to which no proof
of claim has been filed, such Claim shall be allowed, solely for the
purpose of voting on the Plan in the amount in which such Claim has
been listed on the Debtor's schedules or as may be agreed upon by the
holder of such Claim and the Debtor;

E. Any entity holding a duplicate Claim shall be allowed to
vote only one Claim.

The requirements for Confirmation of the Plan are set forth in Section
1129 and will

35
<PAGE>

not be repeated verbatim here. A class of Claims is deemed to have accepted the
Plan if the Plan is accepted by Creditors who hold at least two-thirds in dollar
amount and more than one-half in number of the Allowed Claims of such class
which actually vote for acceptance or rejection of the Plan. The class of
Interests is deemed to have accepted the Plan if the Plan is accepted by
shareholders of the Debtor who hold at least two-thirds shares voting for
acceptance or rejection of the Plan. In the event a class votes to reject the
Plan, the Court cannot confirm the Plan unless it determines that, with respect
to the rejecting class, the Plan treatment is fair and equitable as defined in
Section 1129.

VII
LIQUIDATION ANALYSIS

The following is a comparative analysis of the advantages and
disadvantages of liquidating Pluma pursuant to a confirmed Chapter 11
Liquidation plan as opposed to the

36
<PAGE>

conversion of this Chapter 11 case to a case under Chapter 7 and the resulting
liquidation of assets and administration of the Estate through a Chapter 7 case.

A. REALIZATION OF VALUE.

37
<PAGE>

value of real estate as the sale of such property over time can reasonably be
expected to bring more than through an immediate forced sale.

[THE REST OF THIS PAGE IS INTENTIONALLY BLANK]

38
<PAGE>
<TABLE>
<CAPTION>

Chapter 11 Chapter 7
Assets (in 000's) Liquidation Liquidation
<S> <C> <C>

Sales Consummated Prior to September 24, 1999
Stardust Sale 10,437 10,437
Rocky Mount
Real Estate and Equipment 1,173 1,173
------------ ------------
TOTAL 11,610 11,610
...................................................................................................................
Remaining Real Estate
Altavista 126 126
Chatham Sewing 805 805
Beaver Creek 675 675
Eden Main 2,990 2,000
Eden Knitting 2,623 1,500
Martinsville Sewing 683 683
Vesta 280 280
--- ---
TOTAL 8,182 6,069

Remaining Equipment
Altavista 51 51
Beaver Creek
Chatham Sewing 192 192
Eden Main 2,104 1 ,400
Eden Knitting 457 300
Eden Sewing 61 61
Martinsville Dist. Ctr. 240 240
Martinsville Sewing 219 219
Vesta 129 129
--- ---
TOTAL 3,453 2,592
Accounts
Receivable (9/10/99) TOTAL 8,528 5,482
Inventory (9/10/99) TOTAL 16,825 8,868
------- -------

GROSS RECOVERY 36,988 23,011
Cash on Hand (9/16/99) 11,237 11,237
GROSS AVAILABLE 48,225 34,248

Liquidation Expenses and 8,098 2,000
Chapter 11 Admin. NA 1,000
...................................................................................................................
Net Available for Distribution to
Pre-Petition Creditors (including consummated sales) 51,737 42,658

</TABLE>

2. CHAPTER 7 LIQUIDATION. Chapter 7 would appear to have no
benefits

39
<PAGE>

for Unsecured Creditors. No funds would be initially set aside
to benefit Unsecured Creditors. In addition, the Bank Group's $50.0
million unsecured deficiency claim would dwarf all other Unsecured
Claims such that, if amounts ultimately came available for distribution
to Unsecured Creditors, the Bank Group would receive an estimated
seventy-seven percent (77%) of such distributions. Furthermore,
virtually all property of the Bankruptcy Estate is encumbered by the
pre or post-petition liens granted to the Bank Group. It is clear that
the value of all of the Debtor's tangible property and accounts is
considerably less than the amount of the Bank Group's Secured Claim.
Accordingly, based on procedures now in effect for Chapter 7 cases
pending in the Middle District of North Carolina, a Chapter 7 Trustee
would not administer the liquidation of the Debtor's tangible property
and accounts as the Chapter 7 Estate would have no equity in the
property being sold. Either the Bank Group would be granted relief from
stay or the property would be abandoned. In either case, the Bank Group
would be responsible for liquidating the property outside bankruptcy.
However, whether the Bank Group liquidated the property directly, or a
Chapter 7 Trustee liquidated the property, considerable value would be
lost as the result of the unavoidable forced liquidation of the
property. Substantial inventory value would be lost both as the result
of a failure to convert work in process to finished goods and the
inability of a Chapter 7 Trustee or the Bank Group to utilize the
Debtor's existing resources to effectuate ongoing sales. Most likely,
an inventory liquidation specialist would be brought in to purchase the
inventory in bulk, resulting

40
<PAGE>

in substantial losses. Moreover, losses would likely occur in the
collection of accounts receivable in that the account Debtor would no
longer have an incentive to make an early settlement of its account. In
conclusion, it appears clear that considerably more value will be
realized from the sale of the Debtor's assets in a Chapter 11
liquidation through a confirmed Plan than would be the case under a
Chapter 7 liquidation.

B. BENEFIT TO CREDITORS.

CHAPTER 11. Under the Chapter 11 Plan of Liquidation
significant benefits are granted to Unsecured Creditors which would not
be available under a Chapter 7 Liquidation. The Bank Group has agreed
to "carve out" $750,000.00 of Net Proceeds from the sale of its
collateral and to pay that amount into the Creditors' Fund which will
primarily benefit Unsecured Creditors. The $750,000.00 Carve Out,
representing five percent (5%) or more of the anticipated universe of
Allowed Unsecured Claims,2 would not be available in a Chapter 7, as
the payment of the Carve Out would not otherwise be required. In
addition to the Carve Out, the Bank Group has agreed not to participate
in any distribution of Preference Claim recovery proceeds. This is
significant in that the Bank Group's deficiency claim, established

- ---------------------
( 2) Based on an initial review of unsecured claims scheduled and timely
filed, it is anticipated that Class 6 claims would not exceed $14,750,000.00,
exclusive of rejection claims which might be subsequently filed.

41
<PAGE>

in the Plan at $50.0 million, represents approximately seventy-seven
percent (77%) of the expected total Unsecured Claims debt in the case.

C. BENEFIT TO EMPLOYEES.

42
<PAGE>

43
<PAGE>

D. EFFICIENCY IN THE ADMINISTRATION OF THE CASE.

44
<PAGE>

VIII

PROJECTED CASH DISBURSEMENTS FROM THE LIQUIDATION BUDGET

The professionals for the Bank Group have performed certain analyses
projections with reference to the liquidation process which has resulted in
preparation of a document entitled Pluma, Inc. -- Projected Chapter 11 Winddown
& Liquidation is attached hereto as Exhibit B. Exhibit B tentatively projects
total cash disbursements of $6,800,000.00 and liquidation costs of $1,038,000.00
for total cash expenditures in the liquidation process of $7,838,000.00. The
Debtor, on the other hand, has projected total cash disbursements during the
course of the liquidation of $8,098,000.00. See Exhibit C. Consequently, there
is a variance of less than 3% between the projections of management of the
Debtor and the professionals for the Bank Group. Exhibit D attached hereto
provides the detail for the salaries, wages and benefits listed on Exhibit C as
$3,960,000.00. Exhibit E, attached hereto, itemizes the $415,000.00 estimated
for professional fees in Exhibit C.

45
<PAGE>

ATTACHMENTS OF SPECIFIC INFORMATION

Attached to this Disclosure Statement as Exhibits are the following documents:

Exhibit C: Debtor's Tentative Projected Summary of Disbursements.

Exhibit D: Debtor's Projected Salaries, Wages, and Benefits.

Exhibit E: Debtor's Projected Professional Fees.

Exhibit F: Employee Stay Incentives/Severance. (see also the footnote on
Exhibit B)

Exhibit G: Debtor's Plan of Liquidation. [If the Plan is served as a
separate document together with this Disclosure Statement,
Exhibit G will not be attached.]

46
<PAGE>

CONCLUSION

Based on the foregoing analysis of the Company, its liquidation, and
the Plan of Liquidation, the Debtor believes that the best interests of all
parties would be served through confirmation of the Plan and the Company's
solicits your support thereof.

Respectfully submitted this the 5th day of October, 1999.

PLUMA, INC.

By: _______________________________________
John D. Wigodsky, President/Chief Executive
Officer

ALLMAN SPRY LEGGETT & CRUMPLER, P.A.
380 Knollwood Street, Suite 700
Post Office Drawer 5129
Winston-Salem, NC 27113-5129
Telephone: 336/722-2300
Telecopier: 336/722-8720

47
<PAGE>

EXHIBITS

EXHIBIT 2.6

UNITED STATES BANKRUPTCY COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
GREENSBORO DIVISION

IN RE: )
)
PLUMA, INC., ) CASE NUMBER B-99-11104C-11G
)

DEBTOR.

- --------------------------------------------------------------------------------

DEBTOR'S MODIFIED PLAN OF LIQUIDATION

OCTOBER 5, 1999

- --------------------------------------------------------------------------------

==========================================================================

<PAGE>

TABLE OF CONTENTS

ARTICLE I..............................................................1
SUMMARY OF PLAN...............................................1

ARTICLE II.............................................................2
DEFINITIONS...................................................2
2.1 Administrative Expense......................3
2.2 Agent ......................................3
2.3 Allowed ....................................3
2.4 Ballot .....................................4
2.5 Bank Group .................................4
2.6 Bank Group Representative ..................4
2.7 Bankruptcy Administrator ...................4
2.8 Bankruptcy Causes of Action ................4
2.9 Bankruptcy Code ............................4
2.10 Bankruptcy Court ...........................4
2.11 Bankruptcy Rules ...........................5
2.12 Business Day ...............................5
2.13 Carve Out ..................................5
2.14 Chapter 11 .................................5
2.15 Chapter 11 Case ............................5
2.16 Claim ......................................5
2.17 Class ......................................5
2.18 Committee ..................................5
2.19 Committee Expense Fund......................5
2.20 Company ....................................6
2.21 Confirmation ...............................6
2.22 Confirmation Order .........................6
2.23 Creditor ...................................6
2.24 Creditors' Fund ............................6
2.25 Debtor .....................................6
2.26 DIP Account.................................6
2.27 DIP Loan....................................7
2.28 Disclosure Statement .......................7
2.29 Disputed Claim .............................7
2.30 Effective Date .............................7
2.31 Employee Wage or Benefit Claim .............7
2.32 Entity .....................................7
2.33 Estate Property ............................7

<PAGE>

2.34 Filing Date ................................8
2.35 Final Claims Resolution Order ..............8
2.36 General Unsecured Claim ....................8
2.37 Impaired Claims ............................8
2.38 Insider ....................................8
2.39 Interest ...................................8
2.40 Liquidation ................................8
2.41 Liquidation Budget .........................9
2.42 Liquidation Term ...........................9
2.43 Net Proceeds ...............................9
2.44 Plan .......................................9
2.45 Preference Claim ...........................9
2.46 Priority Claim ............................10
2.47 Recovery Actions ..........................10
2.48 Secured Claim .............................10
2.49 Stock of Pluma, Inc. ......................10
2.50 Tax Claims ................................10
2.51 Unencumbered Causes of Action..............10
2.52 Unsecured Claim ...........................10
2.53 Unsecured Creditor ........................10
2.54 Unsecured Creditors Committee .............10

ARTICLE III ..........................................................11
CLASSIFICATION, IMPAIRMENT AND TREATMENT OF
CLAIMS AND INTERESTS ........................................11
3.1 Class 1 - Administrative Expenses .........11
3.1a Classification ..................11
3.1b Impairment .......................11
3.1c Treatment ........................11
3.2 Class 2 - Wage and Benefit Claims .........12
3.2a Classification ...................12
3.2b Impairment .......................12
3.2c Treatment ........................12
3.3 Class 3 - Tax Claims ......................12
3.3a Classification ...................12
3.3b Impairment .......................12
3.3c Treatment ........................12
3.4 Class 4 - Gaston County Dye and
Finishing Secured Claim ........13
3.4a Classification ...................13
3.4b Impairment .......................13
3.4c Treatment ........................13

<PAGE>

3.5 Class 5 - Secured Claim of Bank Group......13
3.5a Classification ...................13
3.5b Impairment .......................13
3.5c Treatment ........................13
3.6 Class 6 - General Unsecured Claims ........14
3.6a Classification ...................14
3.6b Impairment .......................14
3.6c Treatment ........................15
3.7 Class 7 - Bank Group Deficiency Claim .....15
3.7a Classification ...................15
3.7b Impairment .......................15
3.7c Treatment ........................15
3.8 Class 8 - Shareholders.....................15
3.8a Classification....................15
3.8b Impairment........................15
3.8c Treatment.........................15

ARTICLE IV ...........................................................16
IMPLEMENTATION OF THE PLAN ..................................16
4.1 Generally .................................16
4.2 Asset Sales ...............................16
4.2a Sales of Personal Property .......16
4.2b Sales of Real Property ...........18
4.3 Causes of Action ..........................19
4.3a Preference Claims ................19
4.4 Recovery Actions ..........................20
4.5 Funding ...................................21
4.5a Liquidation Budget ...............21
4.5b Committee Expense Fund ...........22
4.5c Creditors' Fund ..................22
4.6 Distributions .............................23
4.6a Administrative Expenses ..........23
4.6b Post Confirmation Costs and
Expenses..........................24
4.6c Secured Tax Claims ...............24
4.6d Priority Unsecured Claims ........24
4.6e Bank Group Secured Claim .........24
4.6f Unsecured Creditor Claims ........25
4.6g Shareholder Interests ............25

ARTICLE V ............................................................26
ACCEPTANCE OR REJECTION OF THE PLAN .........................26

<PAGE>

5.1 Separate Voting ...........................26
5.2 Acceptance by Classes .....................26
5.3 Persons entitled to vote ..................26
5.4 Cram Down..................................26

ARTICLE VI ...........................................................26
PROVISIONS CONCERNING UNDELIVERABLE DISTRIBUTIONS ...........26
6.1 Undeliverable Distributions ...............26

ARTICLE VII ..........................................................27
EXECUTORY CONTRACTS AND UNEXPIRED LEASES ....................27
7.1 Assumption and Rejection ..................27
7.2 Bar to Rejection Damages ..................27

ARTICLE VIII .........................................................28
PROCEDURES FOR RESOLVING DISPUTED CLAIMS ....................28
8.1 Objections to Claim .......................28
8.2 Payments and Distributions with Respect
to Disputed Claims ........................29
8.3 Timing of Payments and Distributions
with Respect to Disputed Claims ...........29
8.4 Retention and Enforcement of Rights .......29

ARTICLE IX ...........................................................31
NO DISCHARGE, BANK GROUP RELEASE.............................31
9.1 No Discharge ..............................31
9.2 Bank Group Release.........................31

ARTICLE X ............................................................32
EFFECTUATION AND SUPERVISION OF PLAN ........................32
10.1 Retention of Jurisdiction .................32

ARTICLE XI ...........................................................33
MISCELLANEOUS PROVISIONS ....................................33
11.1 Reporting Requirements ................... 33
11.2 Compliance with Tax Requirements ..........34
11.3 Binding Effect of Plan ....................34
11.4 Authorization of Corporate Action .........34
11.5 Retention of Records.......................34
11.6 Cancellation of Corporate Charter..........34
11.7 No Revesting of Estate Property............35
11.8 Modification of This Plan..................35

<PAGE>

11.9 Captions...................................35
11.10 Method of Notice...........................35
11.11 Reservation................................36
11.12 Savings Clause.............................36

<PAGE>

ARTICLE I

SUMMARY OF PLAN

1
<PAGE>

The Plan provides a mechanism for the payment of liquidation and
Administrative Expenses and further establishes procedures for the sale of
assets without the need for further specific Court authorization, provided
consents to such sales are duly obtained from the Bank Group.

ARTICLE II

DEFINITIONS

The capitalized terms used in this Plan shall have the meanings set
forth in this Article II. Any term defined in the Bankruptcy Code or Bankruptcy
Rules and not otherwise defined in this Article II shall have the meaning set
forth in the Bankruptcy Code or Bankruptcy Rules. A reference to an "Article" or
a "Paragraph" refers to an Article or a Paragraph of the Plan. A reference to a
"Section" refers to a Section of the Bankruptcy Code. The rules of construction
set forth in Section 102 of the Bankruptcy Code shall apply in the
interpretation of the Plan.

2
<PAGE>

2.3 ALLOWED: With respect to Claims and Interests, (a) any
Claim against or Interest in the Debtor, proof of which was timely filed or by
order of the Bankruptcy Court was not required to be filed, or (b) any Claim or
Interest that has been, or hereafter is, listed in the schedules of liabilities
filed by the Debtor as liquidated in amount and not disputed or contingent, and,
in each such case in (a) and (b) above, as to which either (i) no objection to
the allowance thereof has been filed within the applicable period of limitation
fixed by the Plan, the Bankruptcy Code, the Bankruptcy Rules or the Bankruptcy
Court, or (ii) an objection has been filed and not withdrawn and the Claim or
Interest has been allowed by a Final Order (but only to the extent so allowed).
Unless otherwise expressly specified in the Plan, an Allowed Claim shall not
include post-petition interest on the principal amount of the Claim.

3
<PAGE>

2.4 BALLOT: The form or forms for voting on the Plan that will
be distributed to holders of Claims or Interests in Classes that are impaired
under the Plan and entitled to vote under Section 1126.

2.5 BANK GROUP: Collectively Bank of America, N.A., Centura Bank,
Suntrust Bank, Atlanta, Crestar Bank and Fleet Bank, N.A.

2.6 BANK GROUP REPRESENTATIVE: That individual or entity designated by
the Bank Group as having the authority to perform the functions of the Bank
Group Representative as provided for in this Plan.

2.7 BANKRUPTCY ADMINISTRATOR: The duly appointed Bankruptcy
Administrator, or an authorized representative of the Bankruptcy Administrator
for the Middle District of North Carolina.

2.9 BANKRUPTCY CODE: Title 11 of the United States Code, as amended
from time to time, as applicable to the Chapter 11 Case.

2.11 BANKRUPTCY RULES: The Federal Rules of Bankruptcy Procedure, as
amended from time to time, as applicable to the Chapter 11 Case.

4
<PAGE>

2.12 BUSINESS DAY: Any day other than a Saturday, Sunday or Legal
Holiday.

2.14 CHAPTER 11: Chapter 11 of Title 11 of the United States Code.

2.15 CHAPTER 11 CASE: In re Pluma Inc., Case No. 99-11104-C-11G
pending in the Bankruptcy Court.

2.16 CLAIM: Any right to (a) payment to or from the Debtor,
whether or not such right is reduced to judgment, liquidated, unliquidated,
fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured, or (b) an equitable remedy for breach of performance if
such breach gives rise to a right to payment to or from the Debtor, whether or
not such right to an equitable remedy is reduced to judgment, fixed, contingent,
matured, unmatured, disputed, undisputed, secured or unsecured.

2.17 CLASS: Shall mean any one of the Classes of Claims or
Interest designated in Article III of the Plan.

2.18 COMMITTEE: The Unsecured Creditors Committee.

2.19 COMMITTEE EXPENSE FUND: A separate interest bearing account which
will be initially funded on the Effective Date by a deposit of Fifty Thousand
Dollars ($50,000) and which will be used to partially defray the
post-Confirmation fees and expenses of Committee professionals.

2.20 COMPANY: Pluma, Inc.

5
<PAGE>

2.21 CONFIRMATION: Confirmation of this Plan by virtue
of the entry of the Confirmation Order.

2.22 CONFIRMATION ORDER: The Order of the Bankruptcy Court confirming
the Plan.

2.25 DEBTOR: Pluma, Inc., a Debtor in possession under Chapter 11.

2.26 DIP ACCOUNT: The Debtor in Possession bank account established
pursuant to Orders entered herein on May 14, 1999 and May 25, 1999.

2.27 DIP LOAN: The Debtor in Possession financing provided by the Bank
Group pursuant to Orders entered herein on June 23, 1999 and July 9, 1999, which
financing was repaid on August 27, 1999.

2.28 DISCLOSURE STATEMENT: The Disclosure Statement describing this
Plan, prepared in accordance with Section 1125 and approved by Order of the
Bankruptcy Court.

6
<PAGE>

2.29 DISPUTED CLAIM: Any Claim (a) that is scheduled by the Debtor as
disputed, contingent or unliquidated, or (b) either scheduled by the Debtor or
proof of which has been filed with the Bankruptcy Court and with respect to
which an objection to its allowance, in whole or in part, has been filed or will
be filed within the applicable limitation period, and which objection has not
been withdrawn, settled or determined by a Final Order.

2.30 EFFECTIVE DATE: The date the Confirmation Order becomes a Final
Order.

2.31 EMPLOYEE WAGE OR BENEFIT CLAIM: An allowed Priority Claim
asserted under Section 507(a)(3) or (4).

2.34 FILING DATE: May 14, 1999, the date the Chapter 11 petition was
filed by the Debtor.

7
<PAGE>

determined and allowed or disallowed, as the case may be, and sets forth a
listing of all Allowed Unsecured Claims.

2.36 GENERAL UNSECURED CLAIM: Any Unsecured Claim other than an
Administrative Expense or a Priority Claim.

2.38 INSIDER: An individual or entity whose relationship to the Debtor
is described in Section 101(31), specifically including all former and present
officers and directors of the Debtor.

2.39 INTEREST: An equity interest evidenced by a share certificate in
Pluma, Inc.

2.40 LIQUIDATION: The sale of all assets of the Company following the
entry of the Confirmation Order.

2.42 LIQUIDATION TERM: The period beginning with the entry of the
Confirmation Order and ending with the final distribution of the proceeds from
the sale or transfer of all

8
<PAGE>

remaining Estate Property to holders of all Allowed Creditor Claims and
Interests in accordance with the priority established herein.

2.43 NET PROCEEDS: With respect to asset sales, gross proceeds less
all direct selling costs and expenses including, without limitation, sales
commissions, debts secured by a lien superior to the Bank Group lien, and
closing costs; with respect to the collection of accounts receivable and causes
of action of the Estate not constituting Unencumbered Causes of Action, gross
collections less all direct collection costs and expenses, including reasonable
legal fees and expenses.

2.44 PLAN: This Chapter 11 Plan of Liquidation as it may be modified
from time to time.

2.45 PREFERENCE CLAIM: Avoidance actions based on Section 547 and
asserted as provided in Paragraph 4.3(a) of the Plan.

2.46 PRIORITY CLAIM.46 PRIORITY CLAIM: Any Claim, other than a Secured
Claim, entitled to a priority of distribution over the Claims of General
Unsecured Creditors pursuant to Sections 507 or 364.

2.48 SECURED CLAIM: Any Claim that is secured by Estate Property to
the extent such Claim is subject to allowance as a Secured Claim under Section
506(a).

9
<PAGE>

2.49 STOCK OF PLUMA, INC.: The common stock of the Debtor at no par
value. There are currently 8,109,152 shares of such stock outstanding.

2.50 TAX CLAIMS: Any Claim by a federal, state or local taxing
authority, including a Claim for ad valorem taxes, entitled to priority ursuant
to Section 507(a)(7).

2.51 UNENCUMBERED CAUSES OF ACTION: Any and all actions, claims,
demands and liabilities, whether known or unknown, in law, equity, or otherwise,
held by or against the Debtor not subject to a lien in favor of the Agent on
behalf of the Bank Group.

2.52 UNSECURED CLAIM: Any Claim that is not an Administrative Expense,
a Secured Claim or a Priority Claim.

2.53 UNSECURED CREDITOR: The holder of a General Unsecured Claim.

2.54 UNSECURED CREDITORS COMMITTEE: The Committee of Unsecured
Creditors appointed by Order of the Bankruptcy Court.

ARTICLE III

CLASSIFICATION, IMPAIRMENT AND TREATMENT OF
CLAIMS AND INTERESTS

3.1 CLASS 1 - ADMINISTRATIVE EXPENSES:
---------------------------------

A. CLASSIFICATION: Class 1 Claims consist of all claims for
Administrative Expenses.

B. IMPAIRMENT: Class 1 Claims are not impaired.

C. TREATMENT: Each holder of an Allowed Administrative Expense
shall receive the full amount of its Allowed Administrative Expense in
cash on the

10
<PAGE>

Effective Date or as soon thereafter as the same may be determined and
allowed; provided, however, that Administrative Expenses representing
post-petition liabilities incurred in the ordinary course of business
by the Debtor shall be paid in accordance with the terms and
conditions of the particular transactions relating to such liabilities
and any agreements relating thereto. Following Confirmation, the costs
and expenses of administering the Estate, as set forth in the
Liquidation Budget, will be paid when due from funds maintained by the
Debtor or from the Creditors' Fund (if outside the Liquidation Budget)
In the case of professionals, payments shall only be made in
accordance with applicable orders and procedures then in effect for
the payment of professional fees. It is the express purpose and intent
of the Plan that all reasonable costs and expenses of administering
this case be paid and appropriate provisions for such payment shall be
made prior to any distribution to Creditors from the Creditors' Fund.

3.2 CLASS 2 - WAGE AND BENEFIT CLAIMS.

B. IMPAIRMENT: Class 2 Claims are not impaired.

C. TREATMENT: Class 2 Claims shall be paid in full from the
Creditors' Fund, in cash on the later of the Effective Date or the date
which is twenty

11
<PAGE>

business days after the date on which the Employee Wage or Benefit
Claim becomes an Allowed Claim.

3.3 CLASS 3 - TAX CLAIMS:

A. CLASSIFICATION: Class 3 shall consist of Allowed Tax
Claims.

B. IMPAIRMENT: Class 3 Claims are not impaired.

C. TREATMENT: All Tax Claims secured by real estate shall be
paid in full in cash upon the sale of such real estate. If a sale has
not occurred within twelve (12) months following the Effective Date,
the taxing authority may pursue its statutory remedies against any
property which is subject to the tax lien of such taxing authority.

3.4 CLASS 4 - GASTON COUNTY DYE AND FINISHING SECURED CLAIM:

A. CLASSIFICATION: Class 4 shall consist of the Allowed
Secured Claim of Gaston County Dye and Finishing Company.

B. IMPAIRMENT: The Class 4 Claim is impaired.

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<PAGE>

take possession of the collateral. Any deficiency claim shall be filed
within thirty (30) days following the Effective Date.

3.5 SECURED CLAIM OF BANK GROUP:

A. CLASSIFICATION: Class 5 shall consist of pre-petition
Allowed Secured Claims of the Bank Group. The Class 5 Claim does not
include any claims relating to the DIP Loan.

B. IMPAIRMENT: Class 5 claims are impaired.

C. TREATMENT: The Allowed Class 5 Secured Claims of the Bank
Group shall be satisfied and fully discharged as follows:

The Bank Group shall receive the Net Proceeds from
the post-petition realization, sale or disposition of Estate
Property, exclusive of the Carve Out (which shall be deposited
into the Creditors' Fund on the Effective Date) and amounts
necessary to fund the Liquidation Budget (which shall remain
in the DIP Account). Solely to the extent that Net Proceeds
have been paid to the Bank Group and subject to the
limitations of Paragraph 4.5(a) below and any other
limitations set out in the Plan, the Bank Group shall provide
funds to the DIP Account necessary to fund any short fall in
the Liquidation Budget. Following confirmation, the Net
Proceeds of sales shall be paid to the Bank Group upon the
closing of such sales. The Bank Group shall retain its liens
on Estate Property following Confirmation to the same extent
that such liens existed pre-Confirmation. The Bank Group
distributions above shall be

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<PAGE>

limited to distributions from realizations on assets which
serve as collateral to the Bank Group Allowed Secured Claim.
The Bank Group deficiency claim shall be a Class 7 Unsecured
Claim.

3.6 CLASS 6 - GENERAL UNSECURED CLAIMS:

A. CLASSIFICATION: Class 6 shall consist of the Allowed Claims
of General Unsecured Creditors, exclusive of the Bank Group deficiency
claim.

B. IMPAIRMENT: Class 6 Claims are impaired.

C. TREATMENT: Class 6 Creditors shall receive pro rata
distributions from the Creditor Fund, as provided in Article IV, until
all Estate assets have been fully liquidated and the proceeds
distributed to Creditors, or until their respective claims shall have
been paid in full, whichever first occurs, provided, however, that the
Debtor may, but need not make any distribution of less than $5.00 to
any creditor.

3.7 CLASS 7 - BANK GROUP DEFICIENCY CLAIM:

A. CLASSIFICATION: Class 7 shall consist of the unsecured
deficiency claim of the Bank Group.

B. IMPAIRMENT: The Class 7 claim is impaired.

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<PAGE>

3.8 CLASS 8 - SHAREHOLDERS:

A. CLASSIFICATION: Class 8 shall consist of the owners of the
Stock of Pluma, Inc.

B. IMPAIRMENT: Class 8 Interests are impaired.

ARTICLE IV

IMPLEMENTATION OF THE PLAN

4.1 GENERALLY: This Plan serves as the mechanism for the
orderly liquidation of all Estate Property in Pluma's bankruptcy case
and provides for the distribution of funds realized through the
liquidation process to Creditors. It does not appear that sufficient
funds will be realized from the liquidation to satisfy all Creditor
Claims in full. Accordingly, the Plan provides for distribution to
shareholders of Pluma only after all Creditor Claims have been
satisfied. While the Debtor expects that the sale of the Debtor's real
property and tangible personal property will be accomplished within six
months following Confirmation, the final distribution to Creditors will
need to await the conclusion of any litigation by or

15
<PAGE>
against the Debtor and the Debtor's Estate. The Plan does provide a
mechanism, however, for an interim distribution to general Unsecured
Creditors, if circumstances warrant.

4.2 ASSET SALES: With respect to the sale of assets following
confirmation, the following procedures shall apply:

a. SALES OF PERSONAL PROPERTY: In winding down its business
operations, the Debtor may continue to sell inventory in the ordinary
course of its business. The Debtor, with the consent of the Bank Group
Representative, shall be free to consummate sale of any personal
property which is subject to the Bank Group's lien, outside the
ordinary course of its business without further notice, hearing or
Court order. Such sales shall be free and clear of liens with such
liens attaching to the proceeds. The Net Proceeds of the sale of
Personal Property shall be paid to the Bank Group at the sale closing.
Although such sales are expressly authorized by this Plan, the Court
will retain jurisdiction to enter an order in aid of consummation, upon
such terms as the Court deems appropriate, to facilitate such sale.
Further, with the consent of the Bank Group Representative, the Debtor
may engage, as necessary or desirable, one or more auctioneers, brokers
or outside sales agents, upon three business days notice to the
Bankruptcy Administrator, which notice shall disclose the proposed
agent's contacts with the Debtor, the compensation to be paid to such
agent and whether such agent has agreed to share its compensation with
any other party. Unless objection is raised in writing by the
Bankruptcy Administrator and received by the

16
<PAGE>

Debtor within three business days following such notice, such agent's
engagement shall be deemed approved without the need for formal
application, notice or hearing. If written objection is received by
the Debtor, and not subsequently waived, the terms and conditions of
any such employment shall be subject to approval of the Court. All
commissions, compensation and expenses of such auctioneers, brokers,
or outside sales agents, to the extent not then included in the
Liquidation Budget, shall be an addition to the amount of the
Liquidation Budget as of the time such item is paid.

b. SALES OF REAL PROPERTY: The Debtor shall be authorized to
sell real property with the express written consent of the Bank Group
or upon entry of a specific Court Order authorizing the sale. All such
sales shall be free and clear of liens with such liens attaching to the
proceeds. The Net Proceeds of the sale of Real Property shall be paid
to the Bank Group at the sale closing. In the event the Bank Group
agrees in writing to the specific terms of a proposed real estate sale,
as evidenced by the signatures of its attorney, such sale shall be
deemed to be authorized by and made pursuant to this Plan. Although so
authorized, the Court will retain jurisdiction to enter an order in aid
of consummation, upon such terms as the Court deems appropriate, to
facilitate such sale. With the consent of the Bank Group, the Debtor
may engage, as necessary or desirable, one or more auctioneers, brokers
or sales agents, upon three business days notice to the Bankruptcy
Administrator, which notice shall disclose the agent's contacts with
the Debtor, the compensation paid such agent and whether such agent has
agreed to share its compensation with any

17
<PAGE>

other party. Unless written objection is received by the Debtor from
the Bankruptcy Administrator within three business days of such
notice, such agent's engagement shall be deemed approved. If written
objection is received by the Debtor, and not subsequently waived, the
terms and conditions of any such employment shall be subject to
approval of the Court. All commissions, compensation and expenses of
such auctioneers, brokers, or outside sales agents, to the extent not
then included in the Liquidation Budget, shall be an addition to the
amount of the Liquidation Budget as of the time such item is paid.

4.3 CAUSES OF ACTION:

a. PREFERENCE CLAIMS: Within sixty (60) days following the
Effective Date, the Debtor shall prepare and make available to the
Committee an analysis of all potential Preference Claims. This analysis
shall include information sufficient to determine, with respect to each
Creditor, and to the best of the Debtor's knowledge, the preferential
payments made to such Creditor and the extent to which new value was
received by the Debtor subsequent to the payment in question. Committee
professionals may critically review the Debtor's analysis and undertake
independent efforts to determine its accuracy. The Debtor will make
available to the Committee those employees and professionals primarily
responsible for the analysis and the Debtor shall provide, as
requested, reasonable assistance to the Committee in the verification
process. After the Committee has had a reasonable opportunity to verify
the accuracy of the Debtor's analysis, the Debtor shall, in due course,
extend

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<PAGE>

to each Creditor which has received an alleged preferential transfer
of $2,500.00 or more, a written notice which shall contain the
following:

(i) Notice of the amount of the Preference Claim and a
particular description of the basis therefor;

(ii) A request that the Creditor provide the Debtor with
information in writing which would constitute a
complete or partial defense to the Preference Claim
asserted;

(iii) Notice that the Creditor may elect to settle and
fully compromise the alleged Preference Claim by the
payment of sixty percent (60%) of the amount of such
claim and that such settlement offer will remain open
until the later of sixty days (60) days following the
date of said notice or the date an adversary
proceeding is filed seeking recovery of the
preferential payment; and

(iv) That said notice constitutes a formal demand for
payment, and that upon the filing of an adversary
proceeding to recover the preference, the Debtor will
seek to recover interest from the date of the demand.

In the event the Creditor alleged to have received a preference is an
Insider, the Notice described above shall be issued by the Committee.

In the event an adversary proceeding is instituted to recover a
Preference Claim, any proposed settlement shall be approved only in accordance
with the provisions of Bankruptcy Rule 9019.

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<PAGE>

The prosecution of Preference Claims against non-Insider Creditors
shall be the responsibility of the Debtor.

4.4 RECOVERY ACTIONS: All Recovery Actions, other than Preference
Claims against non-Insiders, and counterclaims to be filed as part of any
objection to a Claim, may be prosecuted on behalf of the Debtor by the
Committee. The Committee shall have the responsibility of prosecuting Preference
Claims against Insiders in accordance with the procedures outlined in Paragraph
4.3 above.

4.5 FUNDING:

a. LIQUIDATION BUDGET: Prior to the Confirmation hearing, the
Debtor shall submit a Liquidation Budget which shall be made a part of
this Plan. The Liquidation Budget shall be subject to modification from
time to time, as circumstances dictate, with the consent of the Bank
Group, and, to the extent that such modification would result in
additional charges being made to the Creditors' Fund, with the consent
of the Committee. Upon the Effective Date sufficient funds will be held
in the DIP account to fund the Liquidation Budget. The Liquidation
Budget shall be subject to modification from time to time, as
circumstances dictate, with the consent of the Bank Group. If the
Liquidation Budget does not appear sufficient to cover all reasonable
costs and expenses involved in the orderly liquidation of Estate
Property and final administration of this Bankruptcy Case, the Court
may, after notice and hearing, approve additions to the Liquidation
Budget and appropriate procedures for funding such additions from the
Net Proceeds of Asset Sales, up to a maximum

20
<PAGE>

of $450,000, provided the Court finds that such additional charge to
the Bank Group collateral is fair and equitable.

b. COMMITTEE EXPENSE FUND: For the purpose of defraying the
post-Confirmation expenses of the Committee, a separate interest
bearing account will be established and maintained by the Debtor into
which the sum of Fifty Thousand Dollars ($50,000) will be initially
deposited on the Effective Date. (The "Initial Deposit"). To the extent
that the Court approves post-Confirmation professional fees and
expenses of the Committee in excess of the Initial Deposit in the
aggregate, the Bank Group shall deposit additional funds into the
Committee Expense Fund to pay for such fees and expenses, up to a
maximum additional amount of Fifty Thousand Dollars ($50,000) (the
"Supplemental Deposit"). The Bank Group shall be reimbursed for all
funds advanced as a Supplemental Deposit from the first proceeds of
Recovery Actions (other than Preference Actions) otherwise available
for distribution to Classes 6 and 7. The Initial Deposit is not
refundable.

c. CREDITORS' FUND: On the Effective Date the Creditors' Fund
will be established and maintained by the Debtor. The Creditors' Fund
will be funded from time to time by the following:

(i) The Carve Out (which amount is to be deposited on the
Effective Date);

(ii) Net proceeds from the sale of any assets not
encumbered by liens; and

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<PAGE>

(iii) The proceeds of Recovery Actions.

4.6 DISTRIBUTIONS:

a. ADMINISTRATIVE EXPENSES: On the Effective Date all
Administrative Expenses will be paid in full from cash retained by the
Debtor in the DIP account. The fees and expenses of court approved
professionals rendering services pre-Confirmation shall be paid from
funds maintained in the DIP account provided such are within the
parameters of the Liquidation Budget. If such professional fees and
expenses exceed the applicable amount set forth in the Liquidation
Budget, said fees and expenses will be paid from the Creditors' Fund.
In any event, such fees and

22
<PAGE>

expenses shall be paid only upon entry of an appropriate Court order
approving the same.

b. POST CONFIRMATION COSTS AND EXPENSES: Following
Confirmation, the costs and expenses of administering the Estate, as
set forth in the Liquidation Budget, will be paid when due from funds
maintained by the Debtor or, in the case of professionals, in
accordance with applicable orders and procedures then in effect for the
payment of professional fees. It is the express purpose and intent of
the Plan that all reasonable costs and expenses of administering this
case shall be paid and appropriate provisions for such payment shall be
made prior to any distribution to Creditors from the Creditors' Fund.

c. SECURED TAX CLAIMS: Secured Tax Claims will be paid in full
in cash upon the sale of the property securing the claim.

d. PRIORITY UNSECURED CLAIMS: The Debtor has scheduled a small
amount of priority employee related claims and in addition certain
Creditors have asserted priority unsecured claims in filings with the
Court. These priority unsecured claims, if determined and allowed, will
be paid in full in cash from the Creditors' Fund on the Effective Date.
The Debtor is unaware of any pre-petition unsecured Tax Claims. If any
such Claim is determined and allowed such taxing authority will receive
full payment prior to any distribution to general Unsecured Creditors
in Class 6 or the Bank Group deficiency Claim in Class 7.

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<PAGE>

e. BANK GROUP SECURED CLAIM: On the Effective Date all funds
held by the Debtor in excess of the amount needed to fund the
Liquidation Budget and the Carve Out shall be paid to the Bank Group in
partial satisfaction of its Allowed Secured Claim. Thereafter, all Net
Proceeds from the realization, liquidation or sale of Estate Property
which serves as Bank Group collateral will be paid to the Bank Group.

f. UNSECURED CREDITOR CLAIMS: Unsecured Creditors (Classes 6
and 7) will receive pro rata distributions from the Creditors' Fund
upon entry of an order authorizing and approving such distribution
after the Final Claims Resolution Order has been entered; provided
however, that Class 7 shall not participate in the pro rata
distribution of any net proceeds derived from Preference Claims.
Earlier distributions to these Unsecured Creditors will occur only upon
Court order issued after notice and hearing. The Debtor, Bank Group and
Committee each shall have standing to file a motion seeking
authorization for earlier, partial distributions.

g. SHAREHOLDER INTERESTS: After all Creditors have been paid
in full, including the Bank Group on its deficiency Claim and general
Unsecured Creditor Claims, any funds remaining will be distributed to
shareholders of Pluma in accordance with their percentage of stock
ownership in the Debtor. The Debtor does not anticipate that there will
be any such distribution to shareholders.

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<PAGE>

ARTICLE V1ARTICLE V
ACCEPTANCE OR REJECTION OF THE PLAN

5.1 SEPARATE VOTING: Each Impaired Class of Claims or Interests shall
be entitled to vote separately as a Class to accept or reject the Plan.

5.4 CRAM DOWN: If the Plan is rejected by Classes 4, 6 or 8 or any one
of such Classes, the Debtor requests that this Plan nonetheless be confirmed
pursuant to Section 1129(b).

ARTICLE VIARTICLE VI
PROVISIONS CONCERNING UNDELIVERABLE DISTRIBUTIONSP

25
<PAGE>

ARTICLE VIIARTICLE VII
EXECUTORY CONTRACTS AND UNEXPIRED LEASES

7.1 ASSUMPTION AND REJECTION: Unless otherwise subject to a motion
filed on or before confirmation, the Debtor's contracts with Trigon Blue Cross
Blue Shield relating to claims administration and excess risk concerning the
Debtor's Employee Health Insurance Plan for 1999 shall be assumed on the
Effective Date. All other executory contracts which are not the subject of a
pending motion to assume or reject as of the Confirmation Date, or a pending
motion to establish other procedures for the assumption or rejection, or
previously have been rejected by Order of the Court, shall be deemed rejected on
the Effective Date.

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<PAGE>

distribution under the Plan with respect to that Claim unless a proof of Claim
is served on the Debtor, the Committee, and the Bank Group and filed with the
Bankruptcy Court no later than thirty (30) days after the Effective Date, unless
the Bankruptcy Court has ordered otherwise. The provisions of this paragraph 7.2
shall not serve to extend any time period for the filing of a Claim which has
previously been established by the Court arising out of the rejection of any
executory contract or unexpired lease.

ARTICLE ARTICLE VIII
PROCEDURES FOR RESOLVING DISPUTED CLAIMS

8.1 OBJECTIONS TO CLAIMS: Objections to Claims (including, but not
limited to, any Claim arising from or relating to the rejection of any executory
contract or unexpired lease pursuant to Article VIII or otherwise or any
counterclaim which may be asserted against a Claim) shall be filed by the Debtor
(except with respect to objections and or counterclaims to Insider Claims, which
shall be filed by the Committee) with the Bankruptcy Court and mailed to the
holder of the Claim to which objection is made within ninety (90) days following
the Effective Date or such other time as might be established by order entered
hereafter by the Court, provided however, that objections to Claims based on the
provisions of Section 502(d) may be made within sixty (60) days after the entry
of the judgment or order requiring payment to the Debtor. The Debtor (and if
applicable, the Committee) shall act with reasonable promptness to process and
resolve all Claims objections.

27
<PAGE>

8.4 RETENTION AND ENFORCEMENT OF RIGHTS: Pursuant to Section
1123(b)(3) the Debtor will retain and will have the right (except as
specifically provided in Paragraph 4.4) to enforce against any entity any and
all causes of action, claims and rights of the Debtor that arose either before,
upon, or after the Filing Date, including the rights and powers of a trustee and
debtor in possession and as to all Estate Property, including all Bankruptcy
Causes of Action, other than those released or compromised as part of or
pursuant to the Plan provided, however, that for good cause shown the Bank Group
may be allowed to foreclose upon and pursue any such causes of action, claims or
rights constituting collateral for its Class 5 Claim. The Committee will have
the exclusive right as provided in paragraphs 4.3 and 4.4 to pursue Recovery
Actions, not including however Preference Claims against non-Insiders. After the

28
<PAGE>

Effective Date, the Debtor, will retain the right to object to Claims and pursue
if appropriate counterclaims after the Confirmation Date in order to have the
Bankruptcy Court determine the amount and treatment of any Claim.

Neither the Plan nor entry of the Confirmation Order, with the
exception of Paragraph 9.2 of the Plan, shall be construed as a waiver of the
avoidance and recovery powers under the Code of the Debtor, the Committee, or
any other party in interest and this Plan expressly reserves such powers and the
rights of the Debtor, the Committee or any other party in interest to exercise
such powers, to the extent they otherwise exist, whether or not (i) an adversary
proceeding to enforce any such Recovery Action was commenced prior to the entry
of the Confirmation Order or (ii) the defendant was put on any notice prior to
entry of the Confirmation Order of the intention to file a Recovery Action
against it. This reservation of powers includes, but is not limited to (a)
recovery of pre-petition preferential and fraudulent transfers and post-petition
fraudulent transfers to any entity, (b) misfeasance, malfeasance, or breach of
fiduciary or other duty claims, and (c) all other Recovery Actions, and includes
without limitation as defendants (x) the current and former officers and
directors of the Debtor, (y) all entities identified on the Debtor's Statement
of Affairs as being insiders that received transfers from the Debtor within one
year before the commencement of this case, and (z) the sellers of the Stardust
Corporation and Frank L. Robinson Company to the Debtor. The preceding statement
is precautionary and is not to be interpreted as implying that any claim or
cause of action actually exists against any of these entities. Nothing in the
Plan, nor entry of the Confirmation Order, shall be construed as a waiver of

29
<PAGE>

the Debtor's and the Committee's power to object to the allowance of any Claim,
and the Debtor and the Committee expressly reserve such power and the Debtor's
and the Committee's right to exercise such power, whether or not (i) an
Objection to such Claim was filed prior to entry of the Confirmation Order or
(ii) the holder of the Claim was put on any notice prior to entry of the
Confirmation Order of the intention to object to the Claim.

ARTICLE IXARTICLE IX

NO DISCHARGE, BANK GROUP RELEASE

9.1 NO DISCHARGE: Pursuant to Section 1141(d)(3)(A), Confirmation of
this Plan shall not effect a discharge of the Debtor.

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<PAGE>

EFFECTUATION AND SUPERVISION OF PLAN

10.1 RETENTION OF JURISDICTION: The
business and assets of the Debtor shall remain subject to the jurisdiction of
the Bankruptcy Court until all Estate Property is liquidated and the proceeds
are distributed hereunder in full. Subsequent to the Effective Date and until
the closing of the Chapter 11 case by the Bankruptcy Court pursuant to Section
350(a) and Bankruptcy Rule 3022, the Bankruptcy Court shall retain jurisdiction
over the Debtor and the Chapter 11 case for purposes of determining all disputes
and other issues presented by or arising under the Plan, including, without
limitation, jurisdiction: (a) to determine any and all disputes relating to
Claims and Interests and the allowance and amount thereof; (b) to determine any
and all disputes among Creditors with respect to their Claims; (c) to resolve
disputes as to the ownership of a Claim or Interest; (d) to consider and allow
any and all applications for compensation for professional services rendered and
disbursements incurred in connection therewith; (e) to determine any and all
applications, motions, adversary proceedings, any contested or litigated matters
pending on the Effective Date and arising and/or relating to the Chapter 11 case
or the Plan; (f) to confirm the Plan as modified pursuant to Section 1127(b) or
to remedy any defect or omission or reconcile any inconsistency in the
Confirmation Order; (g) to hear and determine disputes arising in connection
with the interpretation, implementation, or enforcement of the Plan, the
Confirmation Order, or any documents executed and delivered in connection with
the Plan; (h) to enforce the provisions of the Plan relating to the
distributions to be made hereunder; (i) to issue such orders, consistent with
Section 1142, as may be necessary to effectuate

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<PAGE>

consummation and full and complete implementation of the Plan, including,
without limitation, appropriate orders to protect the Debtor against actions
taken by holders of Claims or Interests; (j) to hear and determine all actions
of a derivative nature or otherwise brought by the Committee pursuant to
Paragraphs 4.3 and 4.4 hereof; (k) to determine any Bankruptcy Causes of Action
not compromised or released by the Plan; (l) to determine the final amounts
allowable as compensation or reimbursement of expenses pursuant to Section
503(b); (l) to hear and determine matters concerning federal, state and local
taxes ; (m) to resolve any dispute after the Effective Date relating to any
bills submitted by any professional employed pursuant to Order of the Bankruptcy
Court; (n) to hear and determine any other matter not inconsistent with the
Bankruptcy Code; and, (o) to enter a Final Decree closing the Chapter 11 case.
In addition to the foregoing, where such approval is necessary under the terms
of the Plan, the Court shall approve or disapprove the sale of the Debtor's
assets and as to such sales, Section 363 standards shall apply.

ARTICLE XI

MISCELLANEOUS PROVISIONS

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<PAGE>

11.2 COMPLIANCE WITH TAX REQUIREMENTS: In connection with the Plan,
the Debtor will comply with all withholding and reporting requirements imposed
by federal, state and local taxing authorities, and all distributions hereunder
shall be subject to such withholding and reporting requirements.

11.5 RETENTION OF RECORDS: The Debtor will retain its business and
corporate records pending orders of the Court, issued on notice and hearing,
authorizing their destruction.

11.7 NO REVESTING OF ESTATE PROPERTY: Property of the Estate shall not
revest upon confirmation but shall remain Property of the Estate to be
administered hereunder.

11.8 MODIFICATION OF THIS PLAN: The Debtor reserves its rights to
modify this Plan in accordance with Section 1127.

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<PAGE>

11.9 CAPTIONS: Article and paragraph captions used in this
Plan are for convenience only and shall not affect the construction of this
Plan.

11.10 METHOD OF NOTICE: All notices required
to be given under this Plan, if any, shall be in writing and shall be sent by
first class mail, postage prepaid, by overnight courier, or via facsimile
transmission

if to the Bank Group, to: if to the Debtor, to:

with copies to: with copies to:

with copies to:

The Committee
c/o David M. Grogan
Shumaker, Loop & Kendrick, LLP
221 South Tryon Street
Charlotte, NC 28202-3247
Facsimile: (704) 372-8457

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<PAGE>

11.11 RESERVATION: If the Plan is not confirmed by the Bankruptcy
Court for any reason, the rights of all parties in interest in the Chapter 11
case will be preserved in full. Furthermore, any concession reflected herein is
made for purposes of the Plan only, and if the Plan does not become effective,
no party in interest in the Chapter 11 case shall be bound or deemed prejudiced
by any such concession, including a vote which accepts the Plan. Nothing
contained in the Plan waives or shall be deemed to waive any rights of any
holder of an Allowed Claim in the Classes represented by any supporter of the
Plan to object to any provisions of the Plan, all such rights being expressly
reserved.

Respectfully submitted this the 5th day of October, 1999.

PLUMA, INC.

By: Original executed by John D. Wigodsky

Its President and Chief Executive Officer

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<PAGE>

- ---------------------------------------------------------
R. Bradford Leggett, North Carolina State Bar No. 2697
C. Edwin Allman, III, North Carolina State Bar No. 8625
M. Joseph Allman, North Carolina State Bar No. 13395
ALLMAN SPRY LEGGETT & CRUMPLER, P.A.
380 Knollwood Street, Suite 700
Post Office Drawer 1529
Winston-Salem, NC 27113-5129
Telephone: (336) 722-2300
Attorneys for Debtor

EXHIBIT 2.7

UNITED STATES BANKRUPTCY COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
GREENSBORO DIVISION

IN RE: )
)
PLUMA, INC., ) CASE NUMBER B-99-11104C-11G
)
DEBTOR. )
- ------------------------------------)

ORDER CONFIRMING DEBTOR'S PLAN OF LIQUIDATION AS MODIFIED

This matter came on for hearing, upon proper notice, on November 9,
1999 on confirmation of the Debtor's Plan of Liquidation as modified on October
5, 1999 and on November 9, 1999 (hereinafter collectively, the "Modified Plan of
Liquidation"). A copy of the October 5, 1999 Modified Plan of Liquidation and
the Second Modification to Plan are attached hereto and incorporated herein by
reference. Objections to confirmation which had been filed by Rockingham County
and Frank L. Robinson Company were withdrawn during the hearing. The Court,
having considered the Modified Plan of Liquidation, the amended summary of
voting thereon filed on November 9, 1999, the presentations from all interested
parties, and the testimony of the Debtor's chief executive officer presented
during the initial hearing on the Debtor's disclosure statement conducted on
September 30, 1999, finds that the modifications to the Debtor's plan of
liquidation do not adversely change the treatment of the claim of any creditor
or the interest of any equity security holder who has not accepted the
modification in writing, and the Court concludes that the

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<PAGE>

requirements for confirmation set forth in 11 U.S.C. ss.1129(a) have been
satisfied. Therefore, based on the foregoing and for other good and sufficient
cause shown; it is
ORDERED that the Debtor's Modified Plan of Liquidation is confirmed;
and it further
ORDERED that the entry of this confirmation order shall not prejudice,
impair or adversely effect the determination and payment of any administrative
claim, unsecured claim or secured claim (including, but not limited to any right
of setoff under ss.553) of either Frank L. Robinson Company or Pauly Yates
Investment Company should any such claim be allowed; and it is further
ORDERED that the Debtor shall serve a copy of this order, with
attachments, on counsel for the Bank Group, Counsel for the Unsecured Creditors
Committee and the Bankruptcy Administrator, and shall serve a copy of this order
without attachments on all other parties in interest pursuant to the provisions
of the order limiting notice entered herein on May 17, 1999.

DATED: November 19, 1999 /s/William L. Stocks
------------------------------
William L. Stocks
United States Bankruptcy Judge