Bluetooth is a promising wireless technology that enables devices to form short-range multihop wireless adhoc networks, or personal area networks (PANs). However, scatternet formation is one of the challenges that need to be resolved since the performance of a Bluetooth network depends largely on the scatternet topology used. We first identify a particuar variant of a height-balanced binary tree, termed ACB-tree for almost-complete-binary tree, that allows two such trees to be combined to create a larger ACB-tree while retaining the height-balance requirement. We then present a distributed scatternet formation algorithm for creation of ACB-trees. We further extend the algorithm to produce an ACB-tree scatternet with energy ef- ficient properties. We also present simulations, conducted using Blueware simulator, to provide experiment results to study and compare the performance of the resulting scatternets.