Baldwin Uses Loan Proceeds to Pay Backer

Baldwin Co. said Thursday that it had received the proceeds of the $85-million loan it needed to pay off an estranged financial backer and resume operations--including making a payroll payment that it missed Wednesday.

The home builder, which has been in a Chapter 11 bankruptcy since July 18, used $70 million of the new loan to pay off General Electric Capital Corp., which had stopped funding Baldwin last November. A consortium that includes Foothill Capital Corp. and three of Baldwin’s biggest bondholders issued the new loan when it became apparent that the company could collapse without a new source of operating cash.

Brothers James and Alfred Baldwin, who own Baldwin’s operating units, have pledged their shares as collateral for the new loan. They also provided 225 lots in Calabasas, valued at $30 million, as additional collateral. They owned the lots through partnerships not involved with the two business units--Baldwin Builders and Baldwin Building Contractors, L.P., that filed bankruptcy.

Baldwin Co. is scheduled to file its financial recovery plan Feb. 15.