DDi equity holder objects to plan, saying equity holders unfairly treated

By Carlise Newman

Chicago, Nov. 21 - A holder of DDi Corp.'s equity has objected to the confirmation of the company's reorganization plan, saying the plan does not comply with multiple bankruptcy code requirements, all resulting in unfair treatment of equity holders.

Edward Shirley, holder of 1.3 million shares, or 2.5%, of common stock, also filed a motion requesting the appointment of an official committee of equity security holders and extending both the deadline to object to confirmation of reorganization plan, and the confirmation hearing date.

A hearing on the motion, filed by Edward Shirley, will be held on Dec. 2.

The plan was not proposed in good faith and provides for the transfer of property interests of equity security holders to insiders having no claim or interest in the company, Shirley said in a filing with the U.S. Bankruptcy Court for the Southern District of New York.

The plan does not provide equity security holders with property of a value not less than the amount they would receive under a Chapter 7 filing, or the value of their equity interests. It also does not adequately disclose the identity of the post-confirmation officers and directors of the company participating in the plan, or of insiders, Shirley said.

He said the plan provides management with a large equity interest in the reorganized company at the expense of the equity security holders. It also unfairly discriminates, in that it provides unsecured creditors with a recovery that has a premium over the amount of their unsecured claims, he said.

The plan diverts the value of the equity interests away from the equity security holders in order to provide DDi's management with a 20% equity interest in the reorganized company, while relegating the equity holders to only a share of less than a 1% interest in the reorganized debtor, Shirley said.

DDi is an Anaheim, Calif.-based electronics manufacturer.

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