Bankruptcy Court Approves Bridge Loan for Baldwin Co.

Baldwin Co. won U.S. Bankruptcy Court approval this week of a $3-million bridge loan enabling the cash-strapped builder to meet its daily operating expenses until completion of a proposed $85-million loan deal with a group of its junk bond holders.

The bondholders are providing the bridge loan in order to keep the bigger deal alive. Without the $3 million, Baldwin would not be able to meet its payroll or utility bills. The bridge loan expires Jan. 15, when the larger, $85-million operating loan is supposed to be funded.

Baldwin sold $155 million in junk bonds in a 1993 public offering, and the bondholder group wants to keep the company alive because its members own most of the securities. The bonds would be worthless if Baldwin Co. were to go under.

In a related action Tuesday in Bankruptcy Court in Santa Barbara, Judge Robin Riblet issued an order barring Baldwin’s former lender, General Electric Capital Corp., from foreclosing on the builder’s assets pending either the collapse of the bondholders’ loan or completion of the deal Jan. 15.

If the loan is funded, Baldwin would be able to pay off its $70-million debt to GE, and the Connecticut-based finance company’s claims against the builder would evaporate.

Riblet scheduled a Jan. 4 hearing in Santa Barbara to consider approval of the final loan terms.

Baldwin filed for a Chapter 11 bankruptcy reorganization in July, alleging that GE Capital had arbitrarily cut off its financing and forced it into bankruptcy. The Newport Beach-based builder, which has projects in Orange, San Diego, Los Angeles and Ventura counties, is scheduled to present its financial reorganization plan Feb. 15.