A bankrupt golf course in Western Henrico has charted its course to reemerge as a sustainable business, but determining a winner in the Dominion Club saga is about as easy as chipping in from the rough.
Entities tied to HHHunt Corp., one of Richmond’s biggest real estate developers, plan to retain ownership of the Dominion Club and will repay just a fraction of the millions of dollars owed to members.
The plan also calls for the Hunt entities to support the club with a working capital loan over the next five years, to lower the monthly rent the club pays and to look to sell the club and distribute the proceeds to member/creditors within the next 12 years.
One final hurdle remains, however, before things at the Dominion Club can get back to normal.
The creditors, which in this case include most current and former members, must approve the plan.
“I think this is a very well negotiated and good deal for everyone,” said Vernon Inge, a lawyer with LeClairRyan who has represented the club in the case. “Assuming this gets through, it will be a strong reorganized club that can continue into the future.”
Marshall “Nick” Nichols, head of the creditors committee and a member of the club, said that the committee endorses the plan and that it will send a letter to members encouraging them to vote in favor of it.
The Dominion Club filed for Chapter 11 bankruptcy in January after it could not pay $1.7 million in initiation deposit refunds that had come due to about 100 members at the end of 2010. Another $10 million in deposit refunds was due down the road.
Although they argued throughout the process that paying the refund deposits was not their responsibility, Hunt and the other owning entities agreed to several levels of repayments that members can choose from as part of the resolution.
The first level, should members choose the option, will pay 11 cents on the dollar to the 124 members who were owed a combined $1.7 million.
Or they, along with other members whose fees were due down the road, can wait for the club and the related real estate to be sold with the hope that that option would fetch a higher payback.
“There are a lot of things that have to take place over a period of time for the creditors to get any amount back,” said Nichols. “Whether all those things happen over basically the next 12 years is yet to be determined.”
The plan also says that if a sale of the club doesn’t occur within the next 12 years, the owners have to hold a fictitious sale in which sales prices will be assessed and member/creditors will get a percentage.
Both sides seem to agree that a sale of the club is not likely to happen anytime soon given the state of the economy and the health of the golf and country club industry.
Although Nichols thinks it is the best plan going forward, he expressed regret that things came to this.
“I don’t think there’s a winner. Everybody lost,” Nichols said. “The fact that we hopefully have a club going forward is really the only thing that’s a win.”
The club, founded in 1992, is owned by Harry H. Hunt III (4.5 percent), the HHHunt Corp. (0.5 percent) and the Hunt Family Trust II ( 95 percent). The club has been the centerpiece for Hunt’s real estate development in the giant Wyndham community.
And Hunt owns the land — through a subsidiary Loch Levan — on which the club sits and collects the monthly rent paid by the club.
That lease rate was a divisive point in the case, as creditors argued that it was exorbitant and was a big part of the reason the club has never been profitable.
One of the terms of the plan is to lower the annual rent from $1.1 million to $754,000.
Even with that reduction, there’s no guarantee the club will be profitable.
“It will be shaky to break even, but it’s certainly feasible,” Nichols said. “It’s not going to be losing $456,000 a year like it had been.”
Despite the legal troubles involving the club’s ownership, golfers have been teeing up like nothing happened, according to Maggy Magee, the club’s membership director.
The club added 70 members this summer thanks to special pricing. Total membership stands at 849.
Although it’s forking over some money, the Hunt entities at the very worst will end up only paying a fraction of the more than $11 million that members fronted the club in deposits over the years.
“We still lost, as members, millions of dollars,” said Nichols, who put in $20,000 in refundable initiation deposits. “The balance was about $10 million that would come due starting in about another 10 years.”
Robbie Westermann, an attorney with Hirschler Fleischer who represented the club entities, couldn’t be reached by press time.
Tyler Brown of Hunton Williams, who represented the creditors committee, referred all questions to Nichols.
Michael Schwartz is a BizSense reporter. Please send news tips to [email protected].
A bankrupt golf course in Western Henrico has charted its course to reemerge as a sustainable business, but determining a winner in the Dominion Club saga is about as easy as chipping in from the rough.
Entities tied to HHHunt Corp., one of Richmond’s biggest real estate developers, plan to retain ownership of the Dominion Club and will repay just a fraction of the millions of dollars owed to members.
The plan also calls for the Hunt entities to support the club with a working capital loan over the next five years, to lower the monthly rent the club pays and to look to sell the club and distribute the proceeds to member/creditors within the next 12 years.
One final hurdle remains, however, before things at the Dominion Club can get back to normal.
The creditors, which in this case include most current and former members, must approve the plan.
“I think this is a very well negotiated and good deal for everyone,” said Vernon Inge, a lawyer with LeClairRyan who has represented the club in the case. “Assuming this gets through, it will be a strong reorganized club that can continue into the future.”
Marshall “Nick” Nichols, head of the creditors committee and a member of the club, said that the committee endorses the plan and that it will send a letter to members encouraging them to vote in favor of it.
The Dominion Club filed for Chapter 11 bankruptcy in January after it could not pay $1.7 million in initiation deposit refunds that had come due to about 100 members at the end of 2010. Another $10 million in deposit refunds was due down the road.
Although they argued throughout the process that paying the refund deposits was not their responsibility, Hunt and the other owning entities agreed to several levels of repayments that members can choose from as part of the resolution.
The first level, should members choose the option, will pay 11 cents on the dollar to the 124 members who were owed a combined $1.7 million.
Or they, along with other members whose fees were due down the road, can wait for the club and the related real estate to be sold with the hope that that option would fetch a higher payback.
“There are a lot of things that have to take place over a period of time for the creditors to get any amount back,” said Nichols. “Whether all those things happen over basically the next 12 years is yet to be determined.”
The plan also says that if a sale of the club doesn’t occur within the next 12 years, the owners have to hold a fictitious sale in which sales prices will be assessed and member/creditors will get a percentage.
Both sides seem to agree that a sale of the club is not likely to happen anytime soon given the state of the economy and the health of the golf and country club industry.
Although Nichols thinks it is the best plan going forward, he expressed regret that things came to this.
“I don’t think there’s a winner. Everybody lost,” Nichols said. “The fact that we hopefully have a club going forward is really the only thing that’s a win.”
The club, founded in 1992, is owned by Harry H. Hunt III (4.5 percent), the HHHunt Corp. (0.5 percent) and the Hunt Family Trust II ( 95 percent). The club has been the centerpiece for Hunt’s real estate development in the giant Wyndham community.
And Hunt owns the land — through a subsidiary Loch Levan — on which the club sits and collects the monthly rent paid by the club.
That lease rate was a divisive point in the case, as creditors argued that it was exorbitant and was a big part of the reason the club has never been profitable.
One of the terms of the plan is to lower the annual rent from $1.1 million to $754,000.
Even with that reduction, there’s no guarantee the club will be profitable.
“It will be shaky to break even, but it’s certainly feasible,” Nichols said. “It’s not going to be losing $456,000 a year like it had been.”
Despite the legal troubles involving the club’s ownership, golfers have been teeing up like nothing happened, according to Maggy Magee, the club’s membership director.
The club added 70 members this summer thanks to special pricing. Total membership stands at 849.
Although it’s forking over some money, the Hunt entities at the very worst will end up only paying a fraction of the more than $11 million that members fronted the club in deposits over the years.
“We still lost, as members, millions of dollars,” said Nichols, who put in $20,000 in refundable initiation deposits. “The balance was about $10 million that would come due starting in about another 10 years.”
Robbie Westermann, an attorney with Hirschler Fleischer who represented the club entities, couldn’t be reached by press time.
Tyler Brown of Hunton Williams, who represented the creditors committee, referred all questions to Nichols.
Michael Schwartz is a BizSense reporter. Please send news tips to [email protected].