Commercial landlord Meruelo Maddux seeks Chapter 11
Meruelo Maddux Properties Inc., the largest landlord in downtown Los Angeles, said today that it and several of its subsidiaries have filed, or will file, for bankruptcy protection under Chapter 11.
The Los Angeles real estate company warned last week that it might seek Chapter 11 status when it reported steep losses in the fourth quarter. Excluded from the bankruptcy filing is a 35-story apartment tower Meruelo Maddux is building on 9th Street near Staples Center. Meruelo Maddux is heavily invested in industrial real estate, including large properties in the cityâ€™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," said Chairman and Chief Executive Richard Meruelo 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 in a statement.
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 Antonio Villaraigosaâ€™s 2005 mayoral 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 that it was experiencing "significant, recurring cash shortfalls" and was unable to service most of its debt. Shares of Meruelo Maddux closed at 20 cents a share Thursday on Nasdaq, down from a high of more than $10 in 2007.
-- Roger Vincent