$3-Million Infusion Helps Baldwin Avoid Foreclosure : Court: Judge reinstates order blocking GE Capital from taking over O.C. home builder’s assets. Loan for operations must be OKd.

Ailing Baldwin Co. appeared to have kept itself alive Thursday as it persuaded its biggest creditors to provide a $3-million temporary operating loan and won reinstatement of a court order blocking foreclosure by its former lender.

The deal still must be approved in U.S. Bankruptcy Court, where Baldwin Co. has been fighting for its life since filing a Chapter 11 reorganization petition July 18.

Former lender General Electric Capital Corp. wants to foreclose on Baldwin assets because the company is delinquent on $70 million in loans from GE Capital, which severed its relationship with the giant Southland home builder late last month.

Bankruptcy Judge Robin Riblet on Tuesday had lifted a week-old ban on the foreclosure action. But she reinstated it Thursday after Baldwin secured the $3-million temporary loan agreement and dropped a bid to pay its daily operating costs and biweekly payroll with money that it owes to GE Capital.

The temporary loan would tide over Baldwin until a much larger permanent loan from the new lending group is funded in mid-January. The new lenders are Foothill Capital Corp. and three of the investment institutions that own most of the $155 million in junk bonds Baldwin sold in 1993.

Under an agreement signed earlier this week, the new lending group intends to provide Baldwin with $70 million to repay GE Capital and an addition $15-million credit line to fund ongoing operations.

But the money won’t be available until Jan. 15, and GE Capital was unwilling to wait that long without protecting its interests by launching the foreclosure process.

The new lender group argued that a foreclosure would cloud title to the Baldwin assets that are to be used as collateral for the new loan and would likely kill the deal.

After listening to several hours of arguments Thursday, Riblet said she could not prohibit GE Capital from foreclosing unless the new lender group was willing to advance Baldwin the $3 million it estimated it needed to keep operating until the new permanent loan is funded.

That touched off a hasty negotiating session that resulted in the temporary loan agreement and an order from Riblet barring GE Capital from foreclosing.

The order, however, expires Tuesday, when Riblet has scheduled a hearing in her Santa Barbara courtroom to approve the terms of the $3-million interim loan and consider extending the foreclosure ban through Jan. 15.