A court order that would have cut off financially struggling Baldwin Co.'s access to urgently needed cash was delayed a single day Thursday to give the company, its lender, and its creditors a final chance to hash out an agreement.
If none is reached by 5 p.m. today, lender General Electric Capital Corp. has said that it will no longer advance operating funds to Baldwin and will file a default notice against the Newport Beach company.
Baldwin, one of Southern California's largest home builders, filed for a Chapter 11 bankruptcy reorganization in late July after GE declared the company in default, cleaned out Baldwin's bank accounts and cut off its credit line.
After the Bankruptcy Court filing, however, GE renewed its lending commitment. The controversy Thursday centered on GE's insistence on unprecedented powers to foreclose on Baldwin and to prevent the court and other creditors from challenging its decision.
"This is not a matter of denying GE Credit adequate protection," U.S. Bankruptcy Judge Robin Riblet said.
"It is a matter of preventing one creditor from acting without compunction. . . . I can't turn the reins of the case over to you and let you be the judge. I just can't do that," Riblet told GE's attorney.
After the lengthy court session, Baldwin Co. President Alfred Baldwin said the delay would give him 24 hours to forge an agreement. "I think we can resolve this because it is really against the interests of all of us not to," he said.
The home builder had hoped to get an additional $7 million in emergency credit from GE on Thursday, but that matter was also held over because of the stalemate. Baldwin's attorney said the additional cash infusion was urgently needed to continue work on the company's construction projects throughout Southern California. "We cannot wait . . . we have to have that money now," said attorney Greg Gordon.
In a related matter Thursday, Riblet denied a bid by Baldwin Co. to stave off a dozen lawsuits alleging construction defects. More than 1,000 individual home and condominium owners have filed suit claiming their Baldwin-built homes leak and have other problems.
Lawyers for the homeowners want to press the lawsuits in Superior Court because numerous subcontractors and Baldwin affiliates not involved in the reorganization are also being sued. The Bankruptcy Court hearing will resume this afternoon following a creditors' meeting in Los Angeles.