With no middle ground in sight, the parties fighting in court over the future of a bankrupt local golf and country club are headed to mediation.
The Dominion Club, its creditors and members, and the local developer that owns the club were ordered yesterday by the federal bankruptcy court to have a judge try to find a solution in a mediation session that could take place in the next few weeks.
Dominion Club LC and its landlord Loch Levan Land, both of which are tied to local developer HHHunt, filed the motion to seek mediation. The creditors committee, made up of seven current and former members of the Western Henrico club, agreed.
The move came after the sides got together last week to try and resolve the conflict, which centers on who should pay for millions of dollars in refundable initiation deposits owed to members and how ownership of the club will be structured in the future. Those meetings were to no avail.
Now Frank Santoro, a Hampton Roads-based federal judge famous for presiding over Michael Vick’s high profile bankruptcy, has been appointed to try to find a solution.
“We haven’t found any middle ground,” said Marshall “Nick” Nichols, a member of the club and chairman of the unsecured creditors committee. “So we’ll what the mediator can do.”
The fight began in January when the Dominion Club 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. Another $10 million of such deposits is due down the road.
In April, the creditors committee filed a suit in federal bankruptcy court seeking $11.6 million from the various owner-entities, all tied to HHHunt.
But those entities maintain that refunding those millions are not their obligation and that the task falls the club itself, which is a separate legal entity. They asked in late April that the suit be thrown out.
“This is a positive development and I think it’s a good sign that all the parties want to find a way to resolve this and save the club,” said Vernon Inge, an attorney with LeClairRyan representing the club.
The mediation process typically is hashed out in a one-day session where all sides are brought together after submitting their desires and concerns. The judge/mediator then typically goes back and forth, presenting proposals to each side until an agreement is hopefully reached.
Each side in the Dominion Club case has multiple points of contention.
“Mediation will need to resolve who is going to own the club going forward; is the land going to be leased; what’s the lease going to look like; and resolve the litigation,” said Inge.
At issue remain the terms of the lease that the club pays to Loch Levan. The members of the creditors committee argue that the monthly rent is too high and is part of the reason why the club has never been profitable.
Hunt would like to retain ownership of the club, as it is a centerpiece and key marketing tool of the company’s real estate development in the giant Wyndham community.
Options that have been discussed also include having the club become member-managed or even potentially member-owned.
No date for mediation has yet been set, but it could take place in the next few weeks. The details of the mediation meeting will be confidential. If an agreement is reached during the process, the details would be presented to the bankruptcy court for approval.
Michael Schwartz is a BizSense reporter. Please send news tips to [email protected].
With no middle ground in sight, the parties fighting in court over the future of a bankrupt local golf and country club are headed to mediation.
The Dominion Club, its creditors and members, and the local developer that owns the club were ordered yesterday by the federal bankruptcy court to have a judge try to find a solution in a mediation session that could take place in the next few weeks.
Dominion Club LC and its landlord Loch Levan Land, both of which are tied to local developer HHHunt, filed the motion to seek mediation. The creditors committee, made up of seven current and former members of the Western Henrico club, agreed.
The move came after the sides got together last week to try and resolve the conflict, which centers on who should pay for millions of dollars in refundable initiation deposits owed to members and how ownership of the club will be structured in the future. Those meetings were to no avail.
Now Frank Santoro, a Hampton Roads-based federal judge famous for presiding over Michael Vick’s high profile bankruptcy, has been appointed to try to find a solution.
“We haven’t found any middle ground,” said Marshall “Nick” Nichols, a member of the club and chairman of the unsecured creditors committee. “So we’ll what the mediator can do.”
The fight began in January when the Dominion Club 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. Another $10 million of such deposits is due down the road.
In April, the creditors committee filed a suit in federal bankruptcy court seeking $11.6 million from the various owner-entities, all tied to HHHunt.
But those entities maintain that refunding those millions are not their obligation and that the task falls the club itself, which is a separate legal entity. They asked in late April that the suit be thrown out.
“This is a positive development and I think it’s a good sign that all the parties want to find a way to resolve this and save the club,” said Vernon Inge, an attorney with LeClairRyan representing the club.
The mediation process typically is hashed out in a one-day session where all sides are brought together after submitting their desires and concerns. The judge/mediator then typically goes back and forth, presenting proposals to each side until an agreement is hopefully reached.
Each side in the Dominion Club case has multiple points of contention.
“Mediation will need to resolve who is going to own the club going forward; is the land going to be leased; what’s the lease going to look like; and resolve the litigation,” said Inge.
At issue remain the terms of the lease that the club pays to Loch Levan. The members of the creditors committee argue that the monthly rent is too high and is part of the reason why the club has never been profitable.
Hunt would like to retain ownership of the club, as it is a centerpiece and key marketing tool of the company’s real estate development in the giant Wyndham community.
Options that have been discussed also include having the club become member-managed or even potentially member-owned.
No date for mediation has yet been set, but it could take place in the next few weeks. The details of the mediation meeting will be confidential. If an agreement is reached during the process, the details would be presented to the bankruptcy court for approval.
Michael Schwartz is a BizSense reporter. Please send news tips to [email protected].