A Henrico country club is slowly trying to tee itself up to be acquired by its members.
The Dominion Club, a private country club with more than 700 members that filed for Chapter 11 bankruptcy protection in January, ran more of its plan by the bankruptcy judge Monday. The debtors and creditors are working out how best to handle the reorganization of the club.
The club, which opened in 1992, filed for Chapter 11 bankruptcy after it was unable to refund millions of dollars in initiation deposits owed to current and former members. (You can read more about that in the original RBS story here.)
Unlike the Federal Club, a private course in Hanover County that filed for Chapter 11 when it ran out of money to operate, the Dominion Club has the resources to maintain the course. But it could not return members’ initiation deposits, which it was contractually required to do.
Vernon Inge, an attorney with LeClairRyan representing the debtor, said both sides are moving toward an end goal of having a financially viable club that is owned and managed by the club’s members.
“I feel like we’re still going to end up with a good resolution,” said Inge. “It seems to be moving in the right direction.”
Adding to the complexity of the case is the corporate and financial structure tied to the club.
Dominion Club, along with the related Wyndham community, was built by local developer HHHunt.
HHHunt founder Hary Hunt owns 4.5 percent of the club, according to court records. HHHunt Corp. owns 0.5 percent, and the Hunt Family Trust owns 95 percent.
The club’s landlord is another Hunt-related entity, called Loch Levan.
U.S. Bankruptcy Judge Kevin R. Huennekens, who is overseeing the case, said at Monday’s hearing that he wants to see a list identifying all the corporate entities tied to HHHunt and the club before he’ll approve a proposed agreement that would prevent any of the HHHunt-related entities from being sued on matters related to the Dominion Club.
Inge said at the hearing that there are a substantial number of Hunt-related entities.
Tyler Brown, an attorney with Hunton & Williams representing the creditors, said at the hearing that the creditors committee is working to retain a forensic accountant to sort through it all.
Inge said a committee representing the creditors, made up of current and former Dominion Club members, is amenable to the idea of the club being member owned.
For that member-owned goal to be reached, Inge said, “Loch Leven and the members are going to have come to an agreement on what the lease is going to look.”
Marshall “Nick” Nichols, a current member of the Dominion Club who is serving as chairman of the creditors committee, said the case is progressing as expected.
“We are in the process of putting together financial models with various scenarios that will help the committee determine if it makes economic sense for the club to be member owned,” Nichols said in an email to RBS.
Another hearing could be held next week should the club need to access an interim financing fund approved by the court. Inge said at the hearing that the debtors may not need the financing, or perhaps not as much as initially thought.
“[The club] went into bankruptcy with a little more cash than expected,” Inge said at the hearing.
Court records show the club brought in $5.8 million in gross income in 2010 and $5.7 million in gross income in 2009.
Michael Schwartz is a BizSense reporter. Please send news tips to [email protected].