Baldwin Nears End of 2-Year Bankruptcy

NEWPORT BEACH — The two-year bankruptcy of former home building giant Baldwin Co. ends Friday under a reorganization plan that will give control of the Newport Beach home builder to an investment consortium paying $126 million to refinance the company. The consortium is headed by Massachusetts investment group DDJ Capital Management, which specializes in turning around troubled companies.

Under the plan, bondholders will take a 70% stake in the reorganized company, and the other 30% will go to secured creditors and new management, attorneys say. The Baldwin brothers, Alfred and Jim, will retain no interest in the family business started 40 years ago. Instead, DDJ has hired Jack McDonald, former head of Dallas-based Centex Homes, to run Baldwin, which will remain in Orange County. The restructured company will begin operating as New Millennium Homes in the next month after all of Baldwin’s debt holders are paid off.

Jim Johnson, chief executive of Irvine-based Lusk Co., who has been running the builder for more than a year, will stay on with the company as a consultant.

When Johnson took over the company’s operations, it had ceased building homes and was near collapse. It has since sold $35 million worth of homes, sources say.

Baldwin controls almost 6,000 residential lots throughout Southern California and is conducting sales in six communities.

Millennium “will be a player,” said Jeff Meyers of The Meyers Group, a real estate consulting firm. “They are starting out with a tremendous amount of assets in a market where land is extremely valuable.”

Attorneys say the company might sell some of those assets to raise cash or consider a public stock offering.

As part of the plan approved by Judge Robin Riblet, the company will receive $18 million in working capital from Bank of America, plus additional construction loans, said Bill Lobel of Lobel & Opera, the attorney for Baldwin trustee David Gould.

Industry observers say the deal is a vote of confidence for the Southern California real estate recovery. Just last year few companies would have been interested in taking a position in the bankrupt home builder, insiders say.

But job growth and a boost in home sales and prices have since attracted the attention of many East Coast firms, including DDJ, a Wellesley, Mass.-based firm.

The Baldwin brothers continue to operate Newport Beach-based Village Development, which controls several thousand acres in San Diego County.