Meruelo Maddux Properties ordered to retract inaccurate press release

By Caroline Salls

Pittsburgh, Sept. 23 - Meruelo Maddux Properties, Inc. has been ordered to retract a Sept. 9 press release after the U.S. Bankruptcy Court for the Central District of California ruled that the release "constitutes an improper plan solicitation" and "contains substantial inaccuracies," according to a Thursday court filing.

As previously reported, Meruelo Maddux's official committee of unsecured creditors asked the court to bar solicitation of the company's plan of reorganization in connection with the press release.

The company's official equity committee later joined the creditor group's motion, according to Thursday's filing.

The unsecured creditors asked the court to aid confirmation of the competing plan filed by East West Bank and Legendary Investors Group No. 1, LLC.

The committee said the company issued a press release on Sept. 9 entitled "East West Bank Hostile Takeover Plan of Meruelo Maddux Properties Rebuffed by Bankruptcy Court."

According to the committee's motion, East West Bank is not involved in a hostile takeover of Meruelo Maddux, and nothing has been rebuffed by the court.

In addition, the committee said the company claims in the release that is plan has been approved, so there is "no need to proceed with a half-baked plan that attempts to take MMPI over."

The committee said Meruelo Maddux's plan has not been approved, and this statement could have a significant negative impact on plan voting.

"The press release is another example of highly questionable or illegal conduct by the Chapter 11 debtors and their management in these cases," the committee said in the motion.

"The dissemination of the press release was beyond an improper solicitation intended to taint the voter pool in favor of the debtors' plan and shifting blame to EWBC for delays in the debtor's Chapter 11 plan of reorganization."

"Enough is enough. The debtors have eliminated whatever credibility they had remaining."

Meruelo Maddux, a self-managed, full-service real estate company that develops, redevelops and owns commercial and multi-family residential properties, filed for bankruptcy on March 26, 2009. Its Chapter 11 case number is 09-13356.

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