American Office Centers Files Under Chapter 11

American Office Centers, which provides office suites, conference rooms and other accommodations for businesses, has filed for bankruptcy, the latest victim of the sluggish commercial real estate market.

The Huntington Beach company, which provides suites in 18 properties throughout Southern California as well as in Chicago and Dallas, has been struggling with declining occupancy, said its Newport Beach attorney, Allan Leguay.

At the same time, American Office is locked into pricey long-term leases on many properties.

The company, in filing its Chapter 11 bankruptcy petition this week in Santa Ana, is seeking time to negotiate better terms with landlords, or to explore other options for shedding unprofitable leases, Leguay said.

American Office Centers, which has 66 employees, is not planning any layoffs, Leguay said. Owner Jean-Pierre Klifa did not return phone calls for comment.

Many landlords who lease commercial space nationwide have seen vacancies rise as fledgling high-tech companies have failed. But some executive-suite firms said the uncertainty has prompted other businesses, leery of making long-term commitments, to seek offices they can lease on a monthly basis.

In fact, Barrister Executive Suites Inc. of Los Angeles has expanded, opening an office in Long Beach recently because of strong demand for office suites, president Ernest Johnson said.

Massy Farzine, president of Executive Suite Development International, a consulting and suite-management firm in Newport Beach, estimated that executive-suite firms have about 95% occupancy.

In its bankruptcy petition, American Office Centers reported assets and liabilities in the range of $1 million to $10 million.