A significant piece of the beleaguered Baldwin brothers' land holdings in San Diego County can be sold in a foreclosure proceeding, a federal bankruptcy judge there ruled Thursday.
The action is a new blow to the comeback hopes of Newport Beach-based home builders Alfred and James Baldwin, who control 14,000 acres in the Otay Ranch area of south San Diego County through several businesses and partnerships. They have long intended to build a master-planned community there.
Last week, a Bankruptcy Court judge in Santa Barbara stopped the brothers from disposing of much of their land after the trustee running their bankrupt Baldwin Co. home building firm accused the Baldwins of trying to develop and sell land without first offering it to the Baldwin Co. under a long-standing contract.
Trustee David Gould claimed that access to Baldwin-owned land is critical to the effort to cure Baldwin Co.'s financial troubles and repay its more than $250 million in debt. The Baldwins argue that the agreement was canceled earlier this year.
Baldwin Co., once one of the state's largest home builders, declared bankruptcy last year in Santa Barbara.
The rulings in separate bankruptcy cases in San Diego and Santa Barbara seem to be pointing to a steady erosion of the once-powerful Baldwin empire as the brothers, high-profile Orange County socialites, lose control of the land that provided their wealth.
Thursday's ruling in San Diego involves a claim by West Coast Land Fund, which took on a pile of Baldwin debt when one of the brothers' lenders went under in 1993.
Attorneys for West Coast say the Baldwins, through a development partnership they control, owe more than $26 million on a loan that is in default. The loan was secured by the partnership's 1,034 acres of undeveloped Otay Ranch property. The Bankruptcy Court on Thursday cleared that property for a foreclosure sale.
The Baldwins' attorney declined to comment on the case Thursday, but a lawyer for West Coast said the brothers indicated that they would appeal the ruling.
In all, according to court records, various Baldwin brothers entities are in default on more than $100 million in loans on the Otay acreage.
The Baldwin brothers still own bankrupt Baldwin Co., but were ousted from operating control in May when the trustee was appointed. Bankruptcy rules render their stock in the home building company virtually worthless. All creditors would have to be repaid before the brothers could take any money out of the business.