Lender’s Pullout Gives Baldwin 10 Days to Find New Financing

A crucial credit arrangement between bankrupt home builder Baldwin Co. and its chief lender seemed to collapse Friday, leaving the financially strapped Orange County developer just 10 days to come up with a new financial partner.

General Electric Capital Corp. canceled its loan agreement Friday in a dispute over collateral with the Newport Beach builder, but agreed later in the day to continue the financing until a court hearing Nov. 27.

Baldwin Co. said institutions that bought $155 million of its junk bonds in 1993 are negotiating to replace General Electric as the builder’s key lender. To do so, the bondholders would have to buy up Baldwin’s debt to GE--estimated at about $70 million.

Company President Alfred Baldwin said Friday that his firm also intends to file suit against General Electric early next week, claiming that the lender forced Baldwin Co. into bankruptcy and has continually interfered with its efforts to cure its financial problems.

Baldwin, who owns Baldwin Co. with his brother, James, previously has said that Connecticut-based GE Capital pushed the development firm into bankruptcy by arbitrarily cutting off its credit line and sweeping all the cash out of its bank accounts in July. After Baldwin declared bankruptcy, GE negotiated a new deal, increasing Baldwin’s credit line in the process. That loan arrangement, however, has remained a tenuous one.

The uneasy post-bankruptcy alliance began to unravel Friday in a bankruptcy court hearing that had been scheduled to approve a new loan agreement between Baldwin and GE.

Attorneys for the companies said they entered court believing the deal was done. But General Electric balked when Baldwin was unable to meet GE’s demands for special property title insurance on several hundred Ventura County lots being offered as additional collateral for the new loan.

In a brief interview after Friday’s court session, Alfred Baldwin said the 10-day extension will enable the company to continue normal business while General Electric and the Baldwin bondholders negotiate.

“We could end up in better position from this,” he said. “If the creditors buy out GE, we will finally have a lender who wants to be there and wants us to succeed, instead of a lender who wants out of the business.”