A Santa Monica businesses filed for bankruptcy protection in November, raising questions about the health of the local commercial market as companies face difficult economic conditions.
Chapter 11 bankruptcy protection doesn't mean a company is closing. Chapter 11 lets businesses reorganize their debts while staying open. The company operates under court supervision to create a plan for repaying creditors, which may involve restructuring loans, renegotiating leases or making other operational changes. If the court approves the reorganization plan, the company can exit bankruptcy and operate on stronger financial ground.
Santa Monica-based 1251 Fourth Street Investors LLC, a single-asset real estate company whose main property is at 1255 4th Street, filed its own Chapter 11 petition.
1251 Fourth Street Investors LLC reports $10 million to $50 million in both assets and liabilities. The real estate company's case, numbered 25-20294, shows that funds will be available for distribution to unsecured creditors.
The building houses the TJ Maxx store, but there has been no indication that the retailer is leaving because of problems with the building owner.
The filings come as the city tries to revive the local economy against a backdrop of troubling fiscal projections.
Santa Monica City Council unanimously approved a realignment plan recently to restore public safety, revitalize downtown and reach fiscal stability by 2028. The framework addresses rising homelessness, deteriorating public spaces and a projected $29.6 million deficit by using $60 million in reserves for immediate investments. Priorities include a new downtown police substation, expanded patrols, infrastructure improvements, economic development events, streamlined permitting and housing policies. New revenue from parking adjustments, ambulance operations and digital signage aims to generate $21.5 million annually. The plan projects modest deficits through 2027 before reaching a $3.4 million surplus by 2028, with property development potentially rebuilding reserves to $200 million to $300 million.