Ailing O.C. Home Builder Seeks New Funding
The new managers of home-building giant Baldwin Co. have laid off 45 employees and sold $5.2 million worth of homes since being appointed by a federal bankruptcy judge to take control of the ailing development business.
In his first progress report filed in Bankruptcy Court in Santa Barbara, trustee David Gould said that the company, once one of the nation’s biggest home builders, already has used $5 million of its $10 million in available financing.
Gould, who declined to comment on the report, said in it that he anticipates seeking court permission to borrow at least $8.5 million more by the end of the year to keep the company operating.
Many of the 45 employees laid off between May 10 and June 19 were managers with annual salaries in excess of $100,000, the report shows. Baldwin Co. still has 48 employees and an ongoing payroll of $2.4 million a year--down from $4.8 million before the layoffs.
The privately owned company filed for a Chapter 11 bankruptcy reorganization last July, claiming that a dispute with its lender, General Electric Capital Corp., had left it with no cash and more than $245 million in debts.
After months of struggling unsuccessfully to turn things around, company owners Alfred and James Baldwin agreed in May to step down and turn management of the bankrupt business over to the court-appointed team of Gould and James Johnson. Gould is a Los Angeles-based attorney specializing in bankruptcy matters and Johnson is a longtime Southland building industry executive who also is president of Newport Beach-based Lusk Homes.
As part of the management change, Baldwin Co. obtained new loans from an investment group that includes several of the institutional investors that bought $155 million worth of the building company’s junk bonds in 1994. The loans were used to pay off General Electric Capital and provide the $10-million credit line that Gould and Johnson now are drawing on.
To augment cash flow, Gould said in his report, the company has sold 21 homes in Orange and San Diego counties for a total of $5.2 million. Of the total, he reported, $2.8 million has been placed in escrow for the company after paying off subcontractors and suppliers.
Industry insiders say that Gould and Johnson are working to sell as many completed Baldwin homes as possible to retail buyers while attempting to market the company’s assets--including the uncompleted portions of more than a dozen developments in Orange, San Diego, Ventura and Los Angeles counties--to other builders or investors.
