EECO Files Bankruptcy for Some Subsidiaries

EECO Inc., the struggling computer accessories manufacturer, Wednesday sought protection from its creditors by placing several subsidiaries in Chapter 11 bankruptcy in federal court here.

Robert Bonney, chairman of EECO, said the bankruptcy petition affects only the company’s keyboard, switch and keypad divisions. Its hotel computer business unit, EECO Computer Inc., and keypad subsidiary in Scotland, EECO Ltd., were not included in the filing.

Bonney said a list of assets and liabilities and major creditors was not available. But he noted the company’s largest creditor was Sanwa Bank in Los Angeles, which loaned the company about $10 million.

Bonney said Sanwa Bank’s decision in March to cease further funding of the company’s restructuring plan, coupled with its inability to complete the sale of its Maxi-Switch Division, were the primary reasons the company sought court protection.

Last month, a deal to sell the switch division fell through after the company said the bank, which held liens on the assets, did not approve the transaction. Sanwa Bank officials could not be reached for comment.

In addition, he said the company stumbled in part because it could not compete with overseas computer parts makers, which had lower operating costs. Chapter 11 allows a company to reorganize while developing a plan to repay its debts. EECO said it plans to continue operating and cut costs, particularly in its keyboard operation in Tuscon.

The unit, which employs about 100 people, will be “significantly downsized” to focus primarily on higher margin custom keyboard production, Bonney said. He said he did not know exactly how many of the unit’s employees would be laid off.

ECI did not file for bankruptcy because it operates as a separate, independent subsidiary. EECO Ltd., with headquarters in Scotland and serving the European market, is a separate company, governed by English law, and is not subject to the provisions of the U.S. Bankruptcy Code.

Bonney said significant progress toward a return to profitability had been made by the switch and keypad divisions in the first quarter of 1990.

Bonney also announced that George B. DeHuff III, previously president of the switch division, will be president and chief executive officer of EECO Inc. and a member of the board of directors.