Baldwins Slice Pay--After Push From Creditors

Brothers Alfred and James Baldwin, owners of the bankrupt Southern California home building company that bears their name, agreed Friday to cut their $975,000 salaries almost in half to quiet the protests of outraged creditors.

The Baldwins had received raises of $845,000 each just weeks before putting their Newport Beach-based Baldwin Co. into a Chapter 11 bankruptcy reorganization in mid-July.

Under an agreement that the creditors’ committee submitted Friday to U.S. Bankruptcy Judge Robin Riblet, the Baldwins each will be paid $490,000 this year. Although in bankruptcy because of severe cash shortages, the company, one of several the Baldwins own, has been one of Southern California’s most profitable residential developers in recent years, earning $18.9 million last year, $17.9 million in 1993 and $22 million in 1992.

Baldwin Co. filed for bankruptcy July 18 after its major lender, General Electric Capital Corp., suspended its credit agreement in a dispute over how the developer was spending proceeds from the GE loan. After the bankruptcy was filed, however, GE agreed to resume lending to Baldwin, allowing the company to resume building homes after a two-week delay.

In defending the huge salary increases, the Baldwin brothers had pointed out that before the bankruptcy they augmented their relatively small official salaries of $131,000 by drawing millions of dollars each year from the company’s profits. James Baldwin drew an additional $6 million and Alfred Baldwin drew $4.7 million from the company last year, but the bankruptcy filing ended that practice.

Judge Riblet scheduled a hearing Oct. 26 on objections to proposed raises for nearly two dozen other company officials.

At the October hearing, Riblet also has scheduled further discussions of creditors’ objections to plans for a $70-million line of credit that the company says it needs to keep building homes while in bankruptcy. The judge temporarily extended the line of credit from GE Capital until the October hearing.

Creditors said the permanent credit agreement would give GE too much control over Baldwin Co.

GE’s attorney set the stage Friday for a potentially nasty battle when he told Riblet that the lender was not inclined to change terms of its loan to the company.

In an interview after court, attorney Victor Sahn said the lender is miffed because the creditors’ committee talks about suing GE if it determines that the lender’s actions interfere with creditors’ ability to obtain payments from Baldwin Co.