IDM unit ducks foreclosure by going Chapter 11 - again.

Another IDM affiliate seeks bankruptcy shield as well

Facing foreclosure by a so-called "pool investor" that holds an overdue mortgage on a 125-unit Long Beach apartment complex, an affiliate of the IDM Corp. real estate investment operation has -- once again -- sought Chapter 11 bankruptcy protection.

The filing comes less than 20 months after the reorganized IDM and a score of affiliated entities emerged from their previous high-profile Chapter 11 cases.

The same mortgage holder foreclosing on the apartment complex -- an investment group affiliated with "bulk" mortgage buyer J.E. Robert Co. Inc. -- is also pursuing foreclosure on a 118,000-square-foot shopping center in Thousand Oaks, which has led its IDM-affiliated ownership to likewise seek Chapter 11 protection.

Long Beach-based IDM Corp., once a major real estate developer and partnership syndicator, originally filed for bankruptcy protection -- along with 18 of its 90-some affiliated limited partnerships -- in July 1992. The heavily indebted parent and affiliates emerged with reorganization plans in place the following March.

Ten million shares of new common stock were subsequently issued to unsecured creditors -- primarily the 12,000 mostly California investors estimated to have collectively lost $300 million through their interests in overfinanced IDM projects.

Alexandria, Va.-based J.E. Robert is one of the big real estate investment/asset management operations that have pooled investor money -- frequently in partnership with big Wall Street "opportunity funds" -- to purchase huge portfolios of real estate-secured loans and foreclosed properties from federal agencies and financial institutions. Asset managers working from J.E. Roberts' Brentwood office "resolve" West Coast assets, frequently foreclosing on defaulted mortgages.

IDM Apartments Corp., one of the affiliates that sought bankruptcy protection in 1992 and emerged with its finances reorganized, filed a new Chapter 11 petition Nov. 16. That was the day before the J.E. Robert-affiliate partnership was scheduled to take back IDM Apartments' primary asset -- the 125-unit Villa Redondo rental complex on Hathaway Avenue in Long Beach.

Nelson Coleman, chief financial officer of IDM Apartments Inc., explained that the J.E. Robert affiliate, WHC-One Investors L.P., pursued foreclosure on a mortgage -- secured by the Villa Marina property -- it purchased in a bulk package from Bank of America.

J.E. Robert representatives -- none of whom was available for comment -- agreed to extend the note's maturity date beyond the original 1993 due date, Coleman said. However, IDM Apartments wasn't able to secure replacement financing by the extended deadline, and the WHC-One entity then commenced foreclosure actions, he added.

Balance tops $8 million

The bankruptcy petition and related financial statements indicate that the balance on the overdue five-year "roll-over" construction loan is just over $8 million, while the property is valued at about $8.75 million. Other mortgages and "secured claims" against the property related to the previous bankruptcy reorganization plan -- primarily held by investors -- bring the secured debt on the Villa Redondo property to about $11.2 million.

IDM Apartments bankruptcy attorney Lou Kempinsky noted that the 6-year-old project, originally planned as a condominium development, is actually performing well and would be returning "positive cash flow" if not for the big overdue "balloon payment."

The March 1993 reorganization plan, however, left IDM Apartments with additional huge debts well beyond mortgages on the Villa Redondo property and on the corporation's Anaheim redevelopment site -- which isn't currently generating any revenues. That property, on Brookhurst Street, is valued at about $2.1 million and faces secured debts of nearly $3.9 million.

In all, according to financial statements, IDM Apartments Corp. reported about $43.2 million in liabilities -- including about $15.1 million in secured debt -- and only slightly more than $11 million in assets. Coleman explained that the bulk of the unsecured debts likewise are investor claims -- which would presumably only be paid off in full if the properties' values increase substantially over time.

Another filing

Coleman also noted that the El Paseo Associates general partnership that owns most of the Vons Pavilions-anchored, 118,000-square-foot North Ranch Pavilions retail center in Thousand Oaks has also sought Chapter 11 protection. As with Villa Redondo, El Paseo's Dec. 5 filing came a day before WHC-One had scheduled a trustee's sale in connection with an overdue note purchased through the same BofA package.

A wholly owned subsidiary of IDM Corp. is one of two general partners of the El Paseo partnership, Coleman continued. El Paseo had not previously filed for bankruptcy protection and is subject to no other secured debt beyond the WHC-One-held loan, he added. Kempinsky noted that the property is likewise generating positive cash flow.

Vons Companies Inc. owns the "pad" underlying its 50,000-square-foot store within the three-year-old center at 1125-1156 Lindero Canyon Rd., while El Paseo Associates owns the balance of the property, Coleman explained.

Coleman specified that the balance due on the note subject to WHC-One's foreclosure action -- which El Paseo hasn't been able to refinance in time to meet J.E. Robert's extended deadline -- is about $11.7 million. He added that IDM Apartments and El Paseo are the only two IDM affiliates subject to loans held by WHC-One.