Purchase, New York-based Spectrum Information Technologies Inc says its proposed plan of reorganization under Chapter 11 proceeding has been confirmed by Judge Conrad Duberstein. The plan’s effective date and distributions to creditors are contingent on final approval by the district court of the previously announced settlement to the $676m securities class action suit pending against it since 1993. A hearing for this has been tentatively set for November 15. The reorganization would provide all general unsecured creditors with 100% of the value of their claims plus 6% annual interest from the date of the bankruptcy filing. Spectrum would settle all the class action lawsuits filed against it with $250,000 cash about 45% of the equity to class plaintiffs. Although this would dilute the position of existing shareholders, the plan also provides for them to get the majority of the other 45% equity ownership set aside for such shareholders and other creditors. Management and employees would get the other 10% as incentive. It filed for bankruptcy in January 1995.
