PORTLAND – A bankruptcy judge has set Feb. 20 as the date for a hearing on a reorganization plan by Biddeford Textile Corp. that would set aside up to $300,000 in employee back pay.

As part of the reorganization, Biddeford Textile has asked U.S. Bankruptcy Judge James B. Haines to eliminate the employee ownership plan put in place after a 1997 buyout. Employees would likely lose the $200,000 they invested in stock options if the reorganization plan is approved.

The plan, filed late Friday, said the money for the reorganization would come from a $5.8-million deal between Biddeford Textile and a new corporation that plans to revive the troubled electric blanket maker with a new plant, a new name and a new product line.

Biddeford Acquisitions, the Delaware-based joint venture proposing to buy the mill, would assume ownership of the operation under the name Biddeford Blankets.

Biddeford Textile had debts totaling nearly $7.5 million. Its biggest creditor, Taiwanese medical equipment manufacturer Microlife Corp., would hold 51 percent of the joint venture. The rest would be held by businessman Michael Liberty, who helped bail the mill out of financial ruin in 1997, and his family.

As part of the deal, the mills’ two major secured creditors – the National Bank of Canada and American Capital Strategies – would receive promissory notes and equipment to repay the $2.93 million they are owed.

The city of Biddeford would get more than $152,000 in back taxes.

The filing follows a year of turmoil at the 160-year-old blanket maker. In February 2001, Biddeford Textile laid off 350 workers because its biggest customer, Sunbeam Corp., was unable to pay the more than $300,000 it owed the mill. Biddeford Textile filed for bankruptcy protection the following month.

In April, Microlife pumped $50 million into the mill and has continued to help keep the business running, despite several setbacks.

A disgruntled wiring supplier failed to deliver blanket parts, forcing a five-day shutdown in April. In July, the company issued a voluntary recall of almost 40,000 faulty electric blankets.

But Morten Brunvoll, Biddeford Blankets chief executive and Microlife vice president, said he was encouraged by the plan.

The company has already rehired almost 300 workers and is planning to move into a new facility later this year.