Sister Group Filed Month Ago : Second Wespac Trust Seeks Court Protection

Wespac Investors Trust III in Newport Beach joined its sister real estate investment trust this week in seeking the protection of a federal bankruptcy court in Santa Ana.

Wespac Investors Trust II filed for bankruptcy about a month ago.

At that time a spokesman said Wespac III was not in financial trouble. Wespac spokesmen did not return repeated phone calls Thursday.

The companies were moving to cheaper quarters in Santa Monica Thursday.

Hit by Oil Decline

Both trusts were described by an executive in January as being hit hard by the decline of the oil industry in the Southwest, where much of their property is located.

Wespac III owns 12 properties--shopping centers, hotels and apartments--in eight states, according to the company.

The trust announced Thursday that it had filed for protection under Chapter 11 of the bankruptcy laws late Wednesday.

The two publicly traded real estate trusts had arranged for a bailout loan of $5 million in January from US Real Estate Advisors Inc. in Los Angeles.

In return, US Real Estate got the right to replace four of the six Wespac trustees with its own choices. US Real Estate also got warrants to purchase up to 47% of the stock in the two trusts.

Both trusts will work out reorganization plans while under the protection of the bankruptcy court.

Wespac III started in 1983--a year after Wespac II--with $60 million in investors funds. When successful, such trusts accrue tax benefits to investors.

Wespac Financial Corp., which once managed the trusts and was founded by the Deckard family of Tustin, was sold to a group of investors last year.

That company also filed for protection under the bankruptcy laws in December.

The two trusts shared 17 employees as of last month.