Two 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 Brooke Rodd Designs LLC, a lifestyle and fashion retailer, filed for Chapter 11 bankruptcy protection on Nov. 11 in the U.S. Bankruptcy Court for the Central District of California. On Nov. 18, 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 in the same court.
The fashion retailer, owned by designer Brooke Rodd, filed under Chapter 11 Subchapter V, a simplified reorganization option for small businesses. Court documents show the company has assets between $100,000 and $500,000 but owes between $500,000 and $1 million, with one to 49 creditors listed. The case, numbered 2:25-bk-20061 and overseen by Judge Vincent Zurzolo, remains active with the company operating during proceedings.
Rodd worked in the music and photography industries before starting her fashion line after a cross-country move and winning a reality TV show. But the business has struggled with what the filing describes as a large gap between assets and liabilities.
The company says it wants to restructure its debt and keep its Santa Monica store open. Court filings show the business plans to submit a reorganization plan for court approval, letting it continue operations while addressing what it owes creditors.
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.