Meruelo Maddux Properties Inc., the largest landlord in downtown Los Angeles, said Thursday that it would file for bankruptcy protection as soon as today and that several of its subsidiaries already had.
The Los Angeles real estate company warned that it might seek bankruptcy protection last week when it reported steep losses in the fourth quarter. Excluded from the U.S. Bankruptcy Court filing is a 35-story apartment tower that Meruelo Maddux is building on 9th Street near Staples Center.
Meruelo Maddux is heavily invested in industrial real estate, including large properties in the city's produce district. It also owns a handful of mixed-use projects and some residential buildings.
"The company worked with diligence to avoid a reorganization filing," Chairman and Chief Executive Richard Meruelo said in a statement. "Despite our best efforts and careful consideration of all other alternatives, the filing became necessary given the challenging economic climate. Now, our goal is to implement a comprehensive reorganization and continue to seek additional outside financing which we believe will allow us to move forward."
The company "expects to continue to manage its real estate portfolio and does not currently anticipate any disruption to its tenants," it said.
Founder Meruelo has been a longtime advocate of downtown and is a well-known figure in the Latino community. He was the largest individual contributor to Los Angeles Mayor Antonio Villaraigosa's 2005 campaign, donating nearly $200,000.
Last week, Meruelo Maddux reported a loss of $85.8 million, or 98 cents a share, in the three months ending Dec. 31, compared with a loss of $2.6 million, or 3 cents, in the same period a year earlier. The company said it was experiencing "significant, recurring cash shortfalls" and was unable to service most of its debt.
Shares of Meruelo Maddux rose 5 cents to 20 cents, down from a high of more than $10 in 2007.