Baldwin Co., Major Builder, in Bankruptcy : Real estate: The developer, one of the area’s largest, has built more than 15,000 homes in the past four decades.
Baldwin Co., one of Southern California’s largest and oldest home builders, filed for bankruptcy protection Tuesday, making it the largest developer to fall victim to the region’s prolonged real estate slump.
The Newport Based-based company, owned by multimillionaire brothers Alfred and James Baldwin, has built more than 15,000 homes during the past four decades and has almost 3,000 under construction or planned in seven developments stretching from Oxnard to the U.S.-Mexico border.
Baldwin Co. filed for Chapter 11 reorganization in federal Bankruptcy Court in Ventura County, where it has major holdings, including the 106-acre Lang Ranch in Thousand Oaks and the 424-acre Ormand Beach planned community in Oxnard.
Alfred Baldwin said the action was precipitated when the company’s major lender, G.E. Capital Corp., last week cut off its $60-million revolving line of credit, leaving Baldwin and its affiliates without enough cash to pay daily bills.
Baldwin said the company’s two operating units, Baldwin Builders and Baldwin Building Contractors, have obtained a $20-million credit line from Foothill Capital Corp. and that the company’s daily operations “will continue as usual.”
While a severe and prolonged real estate slump has pushed many of Southern California’s beleaguered home builders to the brink of bankruptcy, most have coped by selling off assets and major landholdings.
But the Baldwins “ran out of staying power,” said San Diego real estate consultant Sanford R. Goodkin. “The housing industry is going through chaos and this is the latest evidence that even the major players aren’t protected.”
Baldwin Co. has been juggling finances for more than a year in an effort to keep afloat.
The company sold $155 million in junk bonds in 1993 to raise operating cash and has had to pay $17 million a year just to keep up with the interest on the bonds. It has had to sell valuable undeveloped land to raise cash to meet interest payments. In all, Baldwin owed lenders $245.7 million as of March 31.
Analysts said the bankruptcy filing could mean trouble for bond investors and the company’s cadre of subcontractors and suppliers.
Baldwin was started in the Los Angeles County community of Temple City in 1956 by mail clerk Noel Baldwin, who, with his sons, turned his small chicken ranch into a housing tract. The first house sold for $16,000.
Baldwin is now one of the 15 largest builders in the state, and its homes range from entry-level condominiums that sell for $110,000 to posh luxury estates that go for nearly $600,000.
Brothers Al and Jim took over operations from their father more than 20 years ago and moved the company to Orange County, where they weathered several recessions and became well known for their lavish lifestyles and charitable activities.
They also gained a reputation as hard-nosed businessmen who didn’t shy away from forcing their subcontractors and suppliers into waiting for payment while they used their cash to buy more land and pursue other deals.
A year ago, when a cash crunch hit the company, more than a dozen subcontractors filed almost $1 million worth of claims for non-payment against Baldwin and its affiliates in less than a month.
Even before that happened, however, one of the company’s major subcontractors, Agoura Hills grading contractor Ebensteiner & Co., sued Baldwin Co., the brothers individually and a separate company they own, Village Properties, alleging that Baldwin refused to pay Ebensteiner for more than $9 million for work on several projects, notably the company’s 800-acre Portola Hills planned community in South Orange County.
Additionally, Baldwin said in its recently filed 1994 annual report that it had defaulted on $25.3 million in loans secured by lots in Thousand Oaks and San Diego County but that the lenders had agreed not to foreclose on the property while debt restructuring negotiations continued.
In the past two weeks, the company has been sued for more than $1 million by several other subcontractors who say they were not paid for work on Orange County projects in Anaheim Hills and Portola Hills.
