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EXHIBIT 10.27

AMENDMENT NO. 1

                                   AMENDMENT NO. 1 dated as of July 26, 2005
(this “Amendment”) by and among Quaker Fabric Corporation of Fall River, a
Massachusetts corporation (the “Borrower”), Quaker Fabric Corporation, a
Delaware corporation (the “Parent”), Bank of America, N.A. and the other lenders
party hereto (collectively, the “Lenders”, and individually, a “Lender”) and
Bank of America, N.A., as Administrative Agent, Issuing Bank and Cash Management
Bank.

                                   WHEREAS, the Parent, the Borrower, the
Lenders party thereto, the Administrative Agent, the Issuing Bank and the Cash
Management Bank are parties to that certain Revolving Credit and Term Loan
Agreement, dated as of May 18, 2005 (as amended and in effect from time to time,
the “Credit Agreement”); and

                                   WHEREAS, the Parent and the Borrower have
requested that the Administrative Agent and the Lenders agree to amend certain
of the terms and provisions of the Credit Agreement, as specifically set forth
in this Amendment.

                                   NOW THEREFORE, in consideration of the
premises and the mutual agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:

                                   Section l. Definitions. Except as otherwise
defined in this Amendment, terms defined in the Credit Agreement are used herein
as defined therein.

                                   Section 2. Amendments. Subject to the
satisfaction of the conditions precedent specified in Section 3 herein, the
Credit Agreement shall be amended as follows:

                                   (a)        Section 1.1 of the Credit
Agreement is hereby amended by deleting the definition of “Availability Reserve”
contained therein and substituting in lieu thereof the following new definition:

                   “Availability Reserve.  means, (a) $5,000,000 during the
period commencing on the Closing Date and ending on August 19, 2005, (b)
$7,500,000 during the period commencing on August 20, 2005 and ending on
September 23, 2005, (c) $10,000,000 during the period commencing on September
24, 2005 and ending upon the Administrative Agent’s receipt of a Compliance
Certificate for the period ending at the end of FQ2 of 2006 evidencing
compliance with the covenants contained in §9, (d) $7,500,000 during the period
commencing on the first day immediately following the date the Compliance
Certificate referred to in clause (c) of this definition is delivered to the
Administrative Agent evidencing compliance with the covenants contained in §9
for FQ2 of 2006 and ending upon the Administrative Agent’s receipt of a
Compliance Certificate for the period ending at the end of FQ3 of 2006
evidencing compliance with the covenants contained in §9 and, (e) $5,000,000 at
all other times.”    

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                             (b)        The Credit Agreement is hereby further
amended by deleting Section 9.1 thereof and substituting in lieu thereof the
following:

                “9.1. Minimum Consolidated EBITDA. The Parent and the Borrower
shall not permit Consolidated EBITDA, determined as at the end of each Fiscal
Quarter set forth in the table below for the period of four (4) consecutive
Fiscal Quarters then ending, to be less than the amount set forth opposite such
Fiscal Quarter in such table; provided that, (a) at the end of FQ2 of 2005,
Consolidated EBITDA shall be determined for the two (2) consecutive Fiscal
Quarters then ending and (b) at the end of FQ3 of 2005, Consolidated EBITDA
shall be determined for the three (3) consecutive Fiscal Quarters then ending:  

  Fiscal Quarter   Minimum Consolidated EBITDA     FQ2 of 2005     $ 1,000,000  
    FQ3 of 2005     $ 1,000,000       FQ4 of 2005     $ 4,875,000       FQ1 of
2006     $ 9,750,000       FQ2 of 2006     $ 11,000,000       FQ3 of 2006     $
13,500,000       FQ4 of 2006     $ 14,000,000       FQ1 of 2007     $ 14,750,000
      FQ2 of 2007     $ 15,500,000       FQ3 of 2007     $ 16,000,000       FQ4
of 2007     $ 17,000,000       FQ1 of 2008     $ 17,000,000       FQ2 of 2008  
  $ 17,500,000       FQ3 of 2008     $ 18,000,000       FQ4 of 2008     $
19,000,000       FQ1 of 2009     $ 19,000,000       FQ2 of 2009     $ 19,000,000
      FQ3 of 2009     $ 19,000,000       FQ4 of 2009 and each Fiscal Quarter
ending thereafter     $ 20,000,000    

                             (c)           The Credit Agreement is hereby
further amended by deleting Section 9.2 thereof and substituting in lieu thereof
the following:

                  “9.2. Fixed Charge Coverage Ratio. The Parent and the Borrower
shall not permit the Fixed Charge Coverage Ratio, determined as of the end of
each Fiscal Quarter set forth in the table below, to be less than the ratio set
forth opposite such Fiscal Quarter in such table:

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  Fiscal Quarter   Minimum Fixed Charge Coverage
Ratio     FQ1 of 2006   1.00:1.00     FQ2 of 2006   1.10:1.00     FQ3 of 2006  
1.10:1.00     FQ4 of 2006   1.10:1.00     FQ1 of 2007 and each Fiscal Quarter
ending thereafter   1.15:1.00  

                             (d)           The Credit Agreement is hereby
further amended by deleting Section 9.3 thereof and substituting in lieu thereof
the following:

                  “9.3. Capital Expenditures. During any period referenced in
the table set forth below, the Parent and the Borrower will not, and will not
allow any of their Subsidiaries to, make Capital Expenditures that exceed the
aggregate amount set forth in the table below opposite such period:  

  Period   Amount     FQ1 of 2005 through FQ2 of 2005     $ 5,750,000       FQ1
of 2005 though FQ3 of 2005     $ 6,750,000       Fiscal Year 2005     $
7,500,000       Fiscal Year 2006     $ 10,000,000       Fiscal Year 2007     $
12,000,000       Fiscal Year 2008 and for each Fiscal
Year thereafter     $ 15,000,000    

                             Section 3. Conditions Precedent. The Administrative
Agent, the Lenders, and each of the Parent and the Borrower agree that this
Amendment shall become effective as of July 1, 2005, upon the satisfaction of
the following conditions precedent, each in form and substance reasonably
satisfactory to the Agent:

                             (a)           The Borrower, each Guarantor and each
of the Required Lenders shall have executed and delivered to the Administrative
Agent this Amendment;

                             (b)           The Administrative Agent shall have
received payment from the Borrower for the account of each Lender executing this
Amendment an amendment fee in the amount of 0.125% of the sum of (i) the
Commitment of such Lender and (ii) the outstanding principal amount of the Term
Loan owning to such Lender;

                             (c)           The representations and warranties of
each of the Borrower and each Guarantor in each of the Loan Documents to which
it is a party shall be true and correct on and as of the date hereof, except to
the extent of changes resulting from transactions contemplated or permitted by
the Credit Agreement and the other Loan Documents and changes occurring in the
ordinary course of business that singly or in the aggregate are not materially
adverse, and to the extent that such representations and warranties relate
expressly to an earlier date;

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                                (d)           As of the date hereof, there shall
have occurred no Default or Event of Default; and

                                (e)           The Administrative Agent and the
Lenders shall have received payment for all fees and expenses including, without
limitation, reasonable legal fees and expenses, for which invoices or reasonable
estimates therefor have been provided to the Borrower on or prior to the date
hereof.

                                Section 4. Representations and Warranties. Each
of the Parent and the Borrower hereby represents and warrants to the Lenders as
follows:

                                (a)           The execution and delivery by the
Borrower and each Guarantor and the performance by each of the Borrower and each
Guarantor of each of its obligations and agreements under this Amendment and the
Credit Agreement and the other Loan Documents, as amended hereby, are within the
organizational authority of each such Person, have been duly authorized by all
necessary proceedings on behalf of each such Person, and do not and will not
contravene any provision of law, statute, rule or regulation to which any such
Person is subject or any of such Person’s organizational documents or of any
agreement or other instrument binding upon any such Person;

                                (b)           This Amendment and the Credit
Agreement and the other Loan Documents, as amended hereby, constitute legal,
valid and binding obligations of each of the Borrower and each Guarantor,
enforceable in accordance with their respective terms, except as limited by
bankruptcy, insolvency, reorganization, moratorium or other laws relating to or
affecting generally the enforcement of creditors’ rights in general, and by
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law);

                                (c)           No approval or consent of, or
filing with, any governmental agency or authority is required to make valid and
legally binding the execution, delivery or performance by the Borrower and/or
each Guarantor of this Amendment or the Credit Agreement and the other Loan
Documents as amended hereby, except for such filings which have been made prior
to the date hereof and are in full force and effect;

                                (d)           The representations and warranties
contained in Section 6 of the Credit Agreement are true and correct at and as of
the date made and as of the date hereof, except to the extent of changes
resulting from transactions contemplated or permitted by the Credit Agreement
and the other Loan Documents and changes occurring in the ordinary course of
business that singly or in the aggregate are not materially adverse, and to the
extent that such representations and warranties relate expressly to an earlier
date; and

                                (e)           Each of the Borrower and each
Guarantor has performed and complied in all material respects with all terms and
conditions herein required to be performed or complied with by it prior to or at
the time hereof, and as of the date hereof, after giving effect to the
provisions hereof, there exists no Event of Default or Default.

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                                Section 5. Management Consultant.  

                                (a)           The Borrower hereby confirms that
during the forty days following the date hereof, it will interview one or more
management consultant firms (including, without limitation, one or more
consultant firms recommended by the Administrative Agent). In addition, in the
event that (i) the financial performance of the Parent and its Subsidiaries
through the month of August of 2005 does not meet the expectations set forth in
the revised projections most recently provided to the Administrative Agent, as
measured by sales, Consolidated EBITDA and liquidity and/or (ii) it is unlikely
that the Parent and its Subsidiaries will continue to meet such expectations
beyond August of 2005, in each case, the Borrower hereby confirms its intention
to, and will, promptly retain, at the expense of the Parent and its
Subsidiaries, one such consultant firm.

                                (b)           In the event that a consultant
firm is retained pursuant to the above paragraph (a), (i) the Borrower will
cause such consultant to be available to the Administrative Agent and the
Lenders for discussion of all or any of its analysis, reports, recommendations
and strategic solutions, and (ii) the management consultant firm and the scope
of the engagement of such management consultant firm shall be reasonably
satisfactory to the Administrative Agent.

                                Section 6. Affirmation and Acknowledgment.  

                                (a)           The Borrower hereby ratifies and
confirms all of its Obligations to the Administrative Agent and the Lenders and
the Borrower hereby affirms its absolute and unconditional promise to pay to the
Lenders the Loans and all other amounts due under the Credit Agreement, as
amended hereby. The Borrower hereby confirms that the Obligations are and remain
secured pursuant to the Security Documents, and pursuant to all other
instruments and documents executed and delivered by the Borrower as security for
the Obligations.

                                (b)           Each Guarantor hereby acknowledges
the provisions of this Amendment and hereby confirms and ratifies all of its
obligations under the Guaranty and each Loan Document (as amended hereby) to
which such Guarantor is a party. Each Guarantor hereby confirms (i) that the
Guaranties and each of the other Loan Documents remain in full force and effect
and (ii) that its obligations under the Guaranty to which it is a party are and
remain secured pursuant to the Security Documents to which it is a party.

                                Section 7. No Waiver. Except as otherwise
expressly provided for in this Amendment, all of the terms and conditions of the
Credit Agreement and the other Loan Documents shall remain in full force and
effect without modification or waiver.

                                Section 8. Expenses. The Borrower agrees to pay
to the Administrative Agent and the Lenders upon written demand therefor an
amount equal to any and all reasonable out-of-pocket costs, expenses, and
liabilities incurred or sustained by the Administrative Agent in connection with
the preparation of this Amendment. Amounts payable pursuant to this Section 8
shall be subject to the provisions of Section 15 of the Credit Agreement, as
fully as if set forth therein.

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                                Section 9. Miscellaneous.

                                (a)           This Amendment shall be governed
by and construed in accordance with the internal laws of the Commonwealth of
Massachusetts.

                                (b)           This Amendment shall constitute a
Loan Document under the Credit Agreement, and all obligations included in this
Amendment (including, without limitation, all obligations for the payment of
principal, interest, fees, and other amounts and expenses) shall constitute
obligations under the Loan Documents and be secured by the collateral security
for the Obligations.

                                (c)           This Amendment may be executed in
any number of counterparts, and all such counterparts shall together constitute
but one instrument. In making proof of this Amendment it shall not be necessary
to produce or account for more than one counterpart signed by each party hereto
by and against which enforcement hereof is sought.

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                                IN WITNESS WHEREOF, the parties hereto have
caused this Amendment to be duly executed and delivered as of the day and year
first above written.

  QUAKER FABRIC CORPORATION OF FALL RIVER   QUAKER FABRIC CORPORATION   QUAKER
TEXTILE CORPORATION   QUAKER FABRIC MEXICO, S.A. de C.V.           By:
___________/s/_______________________             Name: Paul J. Kelly  
          Title: Vice President Finance    

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  BANK OF AMERICA, N.A. individually and
as Administrative Agent, Issuing Bank and Cash
Management Bank             By:___________/s/________________________  
          Name: Matthew T. O’Keefe             Title: Senior Vice President    
        WELLS FARGO FOOTHILL, LLC            
By:____________/s/_______________________             Name:             Title:  
          MERRILL LYNCH CAPITAL, A DIVISION
OF MERRILL LYNCH BUSINESS
FINANCIAL SERVICES INC.             By:____________/s/_______________________  
          Name:             Title:    

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