DDI Suppliers Hit With Bill From Bankruptcy Court

John Wolz

Numerous fastener companies and other suppliers, which lost millions of dollars in the Distribution Dynamics Inc. bankruptcy, have received demands for payments they received in the 90 days prior to DDI filing bankruptcy in April 2004.\
Attorney Laurie Jones of the Faegre & Benson law firm of Minneapolis offered to accept 85% on the dollar “in lieu of litigation.” Suppliers have until July 29 to send the money to James Potter as trustee of the DDI Liquidating Trust.
“Specifically, the debtors” financial records indicate that you received the following transfer(s) from the debtors during the 90 days before the debtors filed their voluntary chapter 11 petitions on April 26, 2004,” Jones wrote to suppliers.
Jones wrote to suppliers that if they “dispute that the transfers are preferential,” according to the bankruptcy code they may provide an explanation and documentation.
“Please be advised that if the above-referenced claims are not resolved on or before July 29, 2005, the trustee will commence an adversary proceeding in the bankruptcy court to recover preferential payments,” Jones stated in the letter.
One bankruptcy attorney not connected to the case confirmed that the court has strong powers to recover the payments plus interest.
Anixter International acquired most of the assets of DDI for $32.8 million after a bidding war with Fastenal.
Last year the bankruptcy irked suppliers not just because of money they lost, but that DDI CEO Dominic Polimeni was assured a bonus of at least $1.4 million after less than a year with the company. Some suppliers and stockholders report previously losing money when Polimeni as CEO was involved in the bankruptcy of Questron Technologies.
Anixter officials emphasized last year that the Polimeni bonus was negotiated by the DDI board prior to the Anixter acquisition of DDI.
Two fastener companies were owed more than half a million dollars each and 11 fastener companies were owed more than $50,000 from DDI.
The bankruptcy filing included 1,739 unsecured creditors owed more than a total of $8.4 million.
Eden Prairie, MN-based DDI was a privately held distributor of fasteners, hardware and related products specializing in inventory logistics management programs for OEMs. The company had 227 employees and 20 North American locations. DDI reported $76 million in sales for the fiscal year ended September 30, 2003. �2005 FastenerNews.com