In January, the Dominion Club in western Henrico County filed for Chapter 11 bankruptcy protection after it was faced with a $1.7 million tab of initiation deposit refunds due to about 100 members at the end of 2010.
On Monday, the bankruptcy creditors committee, made up of seven current and former Dominion Club members, filed a lawsuit in federal bankruptcy court seeking $11.6 million from various entities, all tied to HHHunt Corp., one of the area’s largest real estate developers. (You can see the lawsuit here).
The committee claims in the suit that Hunt and the other entities have always supported the Dominion Club’s operations and its deficits and that initiation refunds due now and more than $10 million due down the road should also be paid by the owners.
“Hunt and all its entities surely have $11.6 million, and while they bankrupted the Dominion Club and left nearly 800 members holding the bag, we feel there are entities and companies that are liable for that,” said Nick Nichols, the chairman of the creditors committee.
Dominion Club, along with the related Wyndham community, was built by HHHunt. Harry 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 committee named as defendants HHHunt Corp., Loch Levan Land Limited Partnership, HHHunt/Wyndham Development Corp., Hunting Hawk LLC and Hunt Family Trust II.
Loch Levan is technically the club’s landlord. Hunting Hawk LLC is the operator of the course, according to the suit. (HHHunt also developed a local golf course named Hunting Hawk, but this case is unrelated to that course).
Robert Westermann, an attorney with Hirschler Fleischer representing the defendants, said the charges lack merit.
“We disagree with the allegations and claims in the complaint and will be responding accordingly through appropriate filings in the Bankruptcy Court,” Westermann said in an email response to BizSense. “It is our hope that these proceedings will not have a negative impact on the club’s restructuring efforts.”
That restructuring, at least when the bankruptcy was first filed, was aimed at having the Dominion Club become member-operated.
Vernon Inge, an attorney with LeClairRyan who represents the Dominion Club in bankruptcy, is working to make sure that transition still takes place.
“I’m still hopeful we can get all these issues resolved and get a plan going forward to save the club,” Inge said.
Nichols, a Wyndham resident and member of the club since 1994, isn’t so sure the members will be amenable to the idea of taking over the club because of the recent events.
“That’s probably not going to happen because [the defendants] don’t want to sell the club and they’ve been unreasonable relative to leasing the club,” Nichols said. “Financially it just isn’t viable.”
There are lingering questions about how this suit will play out and how it will affect the future of club.
The lawsuit provides one possible scenario.
“The Defendants failed and refused to honor their obligations to fund operating deficits of the Debtor beginning in December 2010,” the suit claims. “Unless this Court decrees the right of the Debtor to have the Defendants fund any operating deficits the Debtor cannot fund in the future, the Debtor will not have the ability to retain members of the Club in sufficient numbers to make the Club viable.”
The creditors committee is represented by Tyler Brown, an attorney with Hunton Williams. BizSense was unable to reach Brown by deadline.
A message left for HHHunt Corp. President David Reemsnyder was not returned by press time.
Meanwhile, back at the club, Nichols said it’s mostly still country club life as usual for its nearly 800 members.
“We’ve asked the membership to be patient,” Nichols said. “I know there have been a few resignations, but not many. And people have continued to pay their dues and enjoy their club.”
But Nichols said this latest suit could put a chink in some of that support.
“I don’t know what’s going to happen as a result of the lawsuit,” Nichols said. “That may change the members’ perspectives.”
Michael Schwartz is a BizSense reporter. Please send news tips to [email protected]