Leading textile producer and maker of the Polartec fabric, Malden Mills Industries Inc, on Friday emerged from bankruptcy protection after more than halving its crippling debts.

The Massachusetts-based company will now be run by a creditor group led by General Electric Co having slashed its debts from $170 million to less than $80 million following its Chapter 11 filing in late 2001.

Earlier this month the firm announced it had won military orders worth $19.1 million for Polartec garments for use in all branches of the US military including the Marines, Special Operations Forces, the Navy, Air Force and the Army.

Malden Mills figurehead Aaron Feuerstein has lost his position as CEO but will continue as president and chairman while also holding a small stake in the streamlined company.

The 77-year-old, whose grandfather founded the company around 100 years ago and shot to fame when he paid idled workers after a devastating fire in 1995, wants to retain control of the firm but must raise $125m before he can do so.

Acting COO and CFO, David Orlofsky, from Kroll Zolfo Cooper, said: "Malden Mills is emerging from Chapter 11 a transformed company. Two years ago Malden Mills' sales were declining and profits were shrinking. Today I am pleased to say that the company has successfully turned the corner.

"Sales are growing and the company has diversified the Polartec business into new markets. Additionally, the company has reduced its debt load from more than $170m prior to Chapter 11 to less than $80m.

"This puts Malden Mills in a much more financially secure position and will support the continued growth of the company."

He added Malden, which employs around 1,200 people, is in the final stages of selecting a permanent CEO and hopes to name him by the end of 2003.