2 Developers, Holding Firm File for Bankruptcy : Finances: The three companies had been spun off from American Pacesetter almost five years ago.
Three real estate and financial services companies, spun off from American Pacesetter almost five years ago, are seeking court protection while they reorganize their debts, the companies said Friday.
Commercial developer Pacesetter Business Properties, residential developer Pacesetter Homes and American Pacesetter, a bank holding company, filed Thursday in U.S. District Court in Santa Ana for protection under Chapter 11 of the U.S. Bankruptcy Code. All three share a major investor, John H. Klug.
“The three companies were involved in commercial, industrial and residential real estate, as well as financial services,” said Steven R. Strauss, a spokesman for the companies. “It has to do with the economic conditions.”
Like other real estate firms hit by the bleak construction market and a drop in property values, the Pacesetter companies have been turning to property management and investment.
Attorneys were still determining the assets and debts of the companies at the time of the filing. The Pacesetter companies have had to cope with foreclosures and have been forced to transfer rental properties to lenders.
For some time, the companies’ assets have shrunk. All three were delisted from the Pacific Stock Exchange last summer after failing to meet minimum asset requirements.
In June, the main asset of American Pacesetter, San Clemente Savings & Loan Assn., was declared insolvent and seized by federal regulators.
For 1991, the latest fiscal year for which figures are available, Pacesetter Homes posted a loss of $13.1 million on sales of $30.3 million. Pacesetter Business Properties posted a loss of $1.98 million on revenue of $6.5 million.
Income at the residential and commercial real estate companies has since improved after each cut costs. Both firms, after negotiating with lenders and the Internal Revenue Service, adjusted financial statements to reduce liabilities.
