Bankruptcy Court Approves EECO Reorganization Plan

A federal bankruptcy court judge has confirmed a reorganization plan for EECO Inc., clearing the way for the computer components manufacturer to emerge from a Chapter 11 bankruptcy, the company said Thursday.

U.S. Bankruptcy Court Judge John Wilson in Santa Ana approved the company’s plan on Wednesday.

EECO filed for bankruptcy protection last May after failing to sell company assets to raise cash to pay off creditors. Since then, the company has sold its hotel computer manufacturing business and a keyboard manufacturing plant in Caborca, Mexico.

“Confirmation of our plan of reorganization is a major milestone in EECO’s efforts to restructure our business to enable profitable long-term growth,” said George B. DeHuff, president and chief executive.

Under the plan, EECO will pay $11.5 million to its largest creditor, Sanwa Bank in Los Angeles. About $7 million of that will be in cash, and the remainder will be the proceeds of a new loan. A second secured creditor, Gary Beesom, will receive ownership of the company’s Phoenix keypad manufacturing plant as settlement of $6.5 million owed him by EECO.

Unsecured creditors will receive stock amounting to 85% of the company’s common shares outstanding. After selling off some of its assets, the company has about 300 employees in Santa Ana, Phoenix, Mexico and Scotland.

Steven L. Bergh, attorney for the creditors’ committee, said creditors supported the overall reorganization plan and were pleased with the relatively speedy bankruptcy proceedings, which lasted nine months.

DeHuff said the company will emerge officially from bankruptcy following a court-mandated waiting period that expires Feb. 11.