Bankrupt Home Builder’s Creditor Offers $5 Million as Claim Settlement

The chief creditor for bankrupt Newport Beach home builder Baldwin Co. has offered a $5-million settlement to drop the bankruptcy trustee’s claim that it acted improperly when it cut off Baldwin’s credit in 1995--the act that precipitated the bankruptcy filing.

The creditor, General Electric Capital Corp., has offered to pay $1 million cash and release almost $4 million in claims against the Baldwin Co. estate. The offer was filed earlier this month on the eve of a hearing on the case.

The special attorney representing the Baldwin Co. trustee would not comment.

But GE’s attempt to settle appears to bolster the long-standing claim by brothers Al and Jim Baldwin that their company would not have collapsed if the lender had not abruptly canceled a $60-million credit line and impounded almost $14 million from Baldwin Co.’s bank accounts. The actions occurred just days before the building company was to make an $8.5-million payment to holders of its junk bonds.

The settlement offer must be approved by the federal bankruptcy court in Santa Barbara, where the Baldwins filed a bankruptcy petition in July 1995. But in a filing dated Sept. 18, special attorney Ronald Rus said bankruptcy trustee David Gould will seek an order approving the deal.

A hearing on the offer is scheduled Oct. 14 in Santa Barbara.

The Baldwin Co., which built thousands of homes in Southern California from the late 1950s through 1996, many in Anaheim Hills and Portola Hills, was dismantled in the bankruptcy and remains only as a corporate shell.

A successor company, New Millennium Homes, was formed to take over its projects and the Baldwin brothers were removed from the company’s management and ownership.