Struggling downtown L.A. landlord Meruelo Maddux Properties LLC said late Thursday that it and several subsidiaries were filing for Chapter 11 bankruptcy protection, citing severe cash flow problems.
The Los Angeles developer of commercial and multi-family residential properties announced earlier this month that it had stopped making payments on 26 real estate loans totaling $266 million, and warned that independent auditors were likely to issue a "going concern" opinion questioning the company's ability to remain in business.
Meruelo Maddux provided no financial details in today's press release, but a copy of the initial filing posted at the blog la.curbed, said the publicly held company had more than 200 creditors and liabilities of between $100 million to $500 million.
The company, which is downtown L.A.'s largest landowner, did say that the subsidiary overseeing the 35-story 717 W. Ninth Street residential tower project, currently under construction, would not be included in the filing.
"The company worked with diligence to avoid a reorganization filing," said 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."
Meruelo Maddux began the year with $4.5 million in unrestricted cash, but said in its fourth quarter filing that it would need to generate an additional $28 million in income annually to cover current cash shortfalls. Although some properties it plans to sell to raise cash are in escrow, none of the sales have closed so far this year.
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