Tustin Bus Stop Shelter Firm Files for Bankruptcy : * Chapter 11: Metro Display Advertising Inc. seeks court protection to reorganize, suspending payments to scores of investors with lease-back arrangements.

The largest bus stop shelter company in Southern California has filed for bankruptcy reorganization, suspending payments to scores of investors who bought shelters from the company in a lease-back arrangement, its lawyer said Thursday.

Metro Display Advertising Inc. of Tustin, also known as Bustop Shelters of California, will continue to operate while in Chapter 11 proceedings, according to the lawyer.

The bankruptcy filing in U.S. Bankruptcy Court in Santa Ana on Wednesday came with the permission of most of the 16-year-old company’s creditors, including small investors who bought one or more of Bustop’s shelters, he said.

“The creditors and the company are going to support the restructuring of the business operations to resolve some accounting and business issues,” said Marc Tow, the attorney representing Metro Display. “It is not an adversarial relationship at all.”

Metro Display is one of three major players in the fast-growing bus stop shelter business.

The three usually bid against each other for contracts from cities and counties to place the $3,000 transit bus stop shelters along busy streets.

Cities typically receive a one-time “signing fee” and $75 to $150 a month per shelter.

In return, the companies sell advertising space that brings them anywhere from $500 to $1,100 a month for each of the glass-and-metal shelters.

Bus stop shelters have been popular for years in Europe. When the concept was brought to California and the nation in the mid-1970s, however, the aim was to use them to advertise products to passing motorists, bus riders and pedestrians. The shelter business has boomed as more and more cities have enacted tough laws aimed at eliminating unsightly billboards.

Despite a soft advertising market in the past two years, Metro Display has aggressively pursued expansion plans.

By last summer, the company had 2,000 bus stop shelters in Southern California and Southern Nevada. Rival Target Media had 350 shelters and Gannett Transit had 1,500.

In the past year, Metro Display has moved into such communities as Moreno Valley, Irvine, Seal Beach and Lakewood.

But unlike Target Media and Gannett Transit, Metro Display financed much of its expansion by selling individual shelters through investment brokers.

Bob Pinkus of Mission Viejo said he invested $9,500 in a Bustop shelter after hearing an advertisement on a Christian radio station in December, 1987.

As part of the deal, the company promised to pay him $200 a month, minus a $30 cleaning fee, in a lease-back arrangement. And at the end of five years, Metro Display would buy back the shelter for $9,500 or fair market value, whichever was higher. The company also promised investors 20% of the advertising revenue for five years after buying back the shelter, Pinkus said.

Pinkus said the company kept up with its lease payments until this month.

He said he called the company after New Year’s Day when a check did not arrive and was told it was late because of holiday mail. But when it still had not arrived by last week, he called and said he was told: “We got a little problem and we’re going to send you a letter.” That letter still has not arrived, he said Thursday.

“They have been very faithful, and it is disappointing. We were thinking of investing more and (now) we won’t do that,” Pinkus said when informed of the bankruptcy filing. “I certainly hope they come back because it has the potential of being a great investment.”

Tow said Metro Display expanded too quickly.

But he added that the company will live up to the many contracts it has signed with cities and counties where it maintains shelters. Metro Display hopes to prepare a reorganization plan within six weeks and remains under the control of its longtime president, Jean Claude LeRoyer.

Payments to investors were suspended according to provisions of federal bankruptcy law. Tow said an audit is being conducted to determine the number of creditors and the company’s financial status.