(FORTUNE Small Business) – Aaron Feuerstein's 96-year-old family company, Malden Mills, is known for two things: Polartec and compassion. When a 1995 fire devastated the Lawrence, Mass., factory, Feuerstein became a hero by insisting he'd rebuild it and pay his then 3,000 workers' wages and benefits in the interim. It was an expensive act of kindness. Now saddled with debt, the 76-year-old Feuerstein filed for Chapter 11 last November and was down to 1,200 employees. His reflections on the cost of compassion and whether he might have to sell a stake in the mill his grandfather founded:

Is Chapter 11 proof that you made mistakes recovering from the fire?

Had I replaced the factory exactly as it was before the fire, I would have had enough insurance. But I wanted everything to be the absolute latest and best. As a result, we spent millions over what we were insured for.

Have customers shied away?

The CEO of one of our largest customers called to tell me his company is behind me 100%. He said, "You're going to have all our business. We owe it to you." And I said, "Why do you say that?" Back in the early '90s when they had similar trouble, we helped them. And I had plumb forgotten. When you treat people the way you ought to treat them, later on it comes back to you.

Any truth to the rumors that you might sell the family firm?

We're open to the possibility that other firms [might] come in and decrease our debt and increase our capital by joining us. We're in talks with an interested party in order to reduce our risk of overleveraged debt. I consider Chapter 11 just a passing phase. We'll make it.

--JULIE SLOANE