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Baldwin Co. Gets $70-Million Loan, Aims for More : Construction: Company that forced the Newport Beach home builder into bankruptcy is now backing its revival.

August 19, 1995|JOHN O'DELL | TIMES STAFF WRITER

SANTA BARBARA — Baldwin Co. won final approval Friday of a $70-million financing plan to let it operate as normally as possible during its bankruptcy, but the home builder said it is hoping to arrange an even larger loan within weeks to step up its building activity.

The Newport Beach company's plan to boost its borrowing--from the same company that forced it into bankruptcy last month--was disclosed at the end of a day marked by extensive legal maneuvering in U.S. Bankruptcy Court here.

The builder will ask Bankruptcy Judge Robin Riblet on Sept. 22 to approve additional financing from the lender, General Electric Capital Credit Corp., said Baldwin co-owner Alfred Baldwin.

"We want to build a lot more houses, and this means we can," said a jubilant Baldwin. He and his brother, James, are co-owners of the development company.

Although he would not disclose the size of the new loan he expects to receive from General Electric Capital, Alfred Baldwin said the company has the capacity to double its production. Baldwin currently is building about 500 homes in Southern California.

He said that while the bankruptcy has hurt sales in some areas, including San Diego County, it has had relatively little impact in Ventura County.

Baldwin filed for Chapter 11 bankruptcy reorganization July 18, saying that its chief lender, GE, had declared that $23 million worth of Baldwin's property no longer could be used as collateral. Baldwin said the lender cut off the home builder's credit line and pulled about $18 million from the company's bank accounts, causing Baldwin to default on more than $3 million worth of checks to subcontractors and suppliers.

The bankruptcy halted building activities until a temporary financing agreement was worked out three weeks ago, pending Friday's hearing on the final plan.

Asked why GE has apparently changed its mind about the value of his company's land holdings, Alfred Baldwin shrugged: "I said before I don't know why we're even here," he said, gesturing at the courtroom.

Friday's approval of the General Electric financing allows Baldwin Builders and Baldwin Building Contractors to continue developing planned communities, selling homes and honoring home warranties in Orange, San Diego, Los Angeles and Ventura counties.

Baldwin, in turn, will develop a plan to repay creditors, including investors who two years ago purchased $155 million worth of Baldwin bonds.

Baldwin affairs still remain subject to court scrutiny, however. The judge also said she will consider on Sept. 22 the company's request to boost the brothers' annual salaries to $975,553 each. Last year they each received salaries of $131,097 from the company. They also drew $100,000 a week--$5.2 million for the year--against company profits, a practice prohibited under bankruptcy rules.

Both the Baldwin creditors committee and the U.S. Trustee's office filed objections this week to the proposed pay raises, asking the company to provide proof of what the Baldwins do to justify almost $1 million a year each. But the matter didn't come up during Friday's session.

Attorneys for the creditors committee and several individual creditors also said Friday that they would likely object to certain terms of the financing agreement when it comes up for renewal next month.

Although the proposed agreement was filed on Aug. 7, lawyers came to court Friday still arguing over the scope of the Baldwin holdings that General Electric was using as collateral for its loan.

Commenting that General Electric was "being looked upon by [some creditors] as a Pac-Man, trying to gobble up all the security," Riblet said she would not approve any language in the 70-page financing agreement that would allow the lender "to behave outrageously" in its relationship with other Baldwin creditors.

In addition to the GE credit line, the judge also approved smaller credit agreements between Baldwin Co. and three banks that are advancing the company a total of about $10 million to complete several dozen San Diego County condominiums and 22 single-family homes in an Anaheim Hills development in Orange County.

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