DBSI Chapter 11 trustee files lawsuit to gain control of subsidiaries

By Caroline Salls

Pittsburgh, Nov. 6 - DBSI, Inc. trustee James R. Zazzali filed a lawsuit Friday in an effort to secure control over the company's subsidiaries, according to a filing with the U.S. Bankruptcy Court for the District of Delaware.

The defendants are DBSI subsidiaries Stellar Technologies LLC, DBSI Investments LP and iTerra Communications LLC and executives Douglas L. Swenson, Charles E. Hassard, John M. Mayeron, Thomas Var Reeve and John Wasden.

According to the complaint, the management defendants "have recently acted in concert in an attempt to prevent the trustee from exercising DBSI's management and control rights" over the subsidiary defendants, all of which were structured to be controlled by DBSI.

Zazzali said the management's wrongful conduct "is evidenced by their attempt to control, pledge, and/or sell assets of the debtors' estates in violation of the automatic stay."

The trustee said the assets in question include $5.97 million in securities in which DBSI has a majority beneficial interest.

Meridian, Idaho-based DBSI controls a network of real estate entities. The company filed for bankruptcy on Nov. 10, 2008. Its Chapter 11 case number is 08-12687.

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