Baldwin Piano & Organ Co. is near agreement with its two largest creditors on financing that will allow the nation's largest piano maker to develop a bankruptcy reorganization plan.

        One agreement with Deutsche Financial Service Corp. would permit continued floor plan financing of Baldwin's pianos with its network of 350 dealers. The second with General Electric Capital Corp. would provide financing for Baldwin's operations while it attempts to work out a plan to repay creditors.

        The 139-year-old company sought Chapter 11 bankruptcy reorganization on May 31, listing assets of $86.2 million and liabilities of $55.8 million, blaming lack of cash and management decisions.

        Earlier in the month, Kenneth Pavia, a Florida investor and longtime critic of the company's management, succeeded Karen Hendricks as chairman of the Deerfield Township-based company. Robert Jones, a piano industry veteran, was named president and chief executive officer.

        Tim Hurley, Baldwin's bankruptcy lawyer, on Friday told Bankruptcy Judge J. Vincent Aug Jr. the two agreements, if approved by the court, “give this company a running start toward its bankruptcy reorganization.”

        Mr. Hurley told Judge Aug the company's struggle to find financing was distracting efforts to restructure. On June 1, GECC agreed to advance Baldwin an emergency loan of $1.2 million so it could meet its payroll. Baldwin, which employs about 700, has cut about 50 jobs, reducing its annual payroll by $3.3 million.

        Judge Aug agreed to amend that agreement, giving the company another $100,000 so it could meet payroll due Friday. He also agreed to a Monday hearing on an interim order approving the approximately $3.4 million in bankruptcy financing known as debtor in possession, or DIP financing.

        About $500,000 of the DIP financing will be needed to meet other payroll obligations due Monday, Evan Jones, GECC's lawyer, said.

        If the interim order is approved, the financing would become final following another hearing 15 days later.

        Richard Boydston, lawyer for Deutsche Financial, which acquired Baldwin's financing business for $35 million in March 2000, said he and lawyers for GECC were working out final wording on the floor plan financing and expected to present itfor approval by Monday.

        Mr. Hurley said GECC's bankruptcy financing includes one provision requiring the company to hire an investment banker to find an investor or lender to take over GECC's position if it fails to comply with certain lending formulas for more than 60 days. He said Baldwin's management doesn't believe that will be an issue.

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