Bankruptcy Plan Would Leave Out Baldwin Brothers
The trustee for bankrupt Baldwin Co. has filed a reorganization plan that would give ownership of the once powerful home builder to its creditors and current management while leaving brothers Alfred and James Baldwin with no interest in the company that bears their name.
The plan, which was filed Friday in U.S. Bankruptcy Court in Santa Barbara, must still be approved by creditors and a bankruptcy judge.
The brothers, who placed the 40-year-old family business in bankruptcy in July 1995, had been pushed out of the firm’s daily operations last May under a court order.
Turnaround specialist James Johnson, who has been running the Newport Beach company for the last 11 months, would continue in that role under the reorganization plan. He also runs Newport Beach-based home builder Lusk Co.
The company, which has debts of about $250 million, would issue stock giving its lenders a 50% stake in the restructured business. Its unsecured creditors, including bondholders, would receive a 40% stake in the new company, said Irvine attorney William Lobel, whose firm, Lobel & Opera, represents the bankruptcy trustee. The current management team would get 10% of the new stock, and the Baldwin brothers would own no stock.
According to the filing, Baldwin will need about $50 million in additional financing to keep the company running, including $20 million to pay off a loan from Bank of America.
However, some unsecured creditors have already raised concerns that they would not receive a large enough stake in the newly structured company, said Ken Funsten of Funsten Asset Management in Marina del Rey. Funsten is a bondholder.
Both sides desire to have the Baldwin brothers out of the company. The Baldwins put the company into bankruptcy after its main lender at the time declared them in default on an $85-million operating loan and refused to advance them any more cash. The lender, General Electric Capital Corp., also swept $13 million in cash from Baldwin Co.’s various bank accounts, leaving the firm unable to pay its bills.
The brothers continue to operate a business, Village Properties, that is headquartered in Newport Beach and controls several thousand acres of raw land in southern San Diego County. While not involved in the Baldwin Co., bankruptcy, Village reportedly has problems of its own and is in default on loans covering millions of dollars the brothers borrowed to acquire the San Diego acreage in the 1980s.
The Baldwins and Johnson did not return calls for comment.
