As it hovers in Chapter 11 bankruptcy protection, according to a local wills and estate lawyer, a local timeshare and resort development company is close to settling a longstanding legal dispute with the estate of a deceased Richmond attorney. And if approved, the agreement could end with the sale of the firm’s resort in the Bahamas and a windfall inheritance for two local churches.
Land’or International, headquartered on Staples Mill Road, said in federal court filings on Friday that it has reached an agreement that will pay $5 million to St. Mary Roman Catholic Church and Cathedral of the Sacred Heart. The lawsuit and the right to try to collect millions in unpaid debt from Land’or were passed to the churches through the will of late local attorney Frank Eck.
Eck had been heavily involved with Land’or’s operations and made a loan to the company for its now failed resort venture in Williamsburg. When he died in August 2011, he had been trying to collect on the allegedly defaulted debt from the company.
According to the terms of the settlement as explained in court filings, Club Land’or, the company’s resort on Paradise Island in the Bahamas, will pay a total of $5 million to the churches through monthly payments.
The repayment note is secured by a mortgage against the Bahamas property, and the company will look to either sell its Club Land’or resort or sell Club Land’or stock to fund the payments.
The churches and Eck’s estate will agree to surrender their stock in all Land’or entities, with the exception of Club Land’or. Eck’s estate holds a nearly 15 percent stake in the Bahamas operation, the court filings show.
The dispute stems from a $2.25 million loan Eck made to Land’or toward its purchase of the former Lightfoot Plantation resort in Williamsburg in 2004. Land’or lost the property to foreclosure in 2011. It’s now under new ownership and known as Colonial Crossings.
Eck sued Land’or International, several of its affiliates and its top executives, John Holt III and Ronald Holt, after the loan went into default. The loan agreement had a default interest rate of 25 percent, and the balance ballooned to more than $6 million, court filings show.
With a trial on the matter set for this week, Land’or International filed for Chapter 11 bankruptcy on June 6. The Eck claims were by far the company’s largest debt listed in its bankruptcy filing.
In light of the pending settlement that would extinguish the bulk of its debt, Land’or asked last week to be released from its Chapter 11 case.
John Holt has not returned several messages in recent weeks.
Land’or’s attorney Dawn Stewart of Washington, D.C. declined to comment last week.
The churches are represented by Richmond attorney Chris Habenicht of Hopson, Habenicht and Cave. He declined to comment on the case.
Additional legal issues, however, continue to hover over the company and the Holts.
In April, more than 50 Land’or timeshare customers filed a case against the company and Club Land’or. They claim fraud and violations of state consumer protection laws related to the sale of Bahamas resort timeshares. Among other claims, the case alleges that the resort, built in 1982, is not being maintained and that fees paid by the timeshare customers are not being used as promised by the company for upkeep of the property.
The case seeks more than $750,000 in damages. A trial for the case is pending in Henrico County Circuit Court. Land’or is pushing for it to be dismissed.
Land’or CEO John Holt and his brother, company president Ronald Holt, are also being sued in two federal cases in New York. Those suits are related to personal guarantees the Holts made on timeshare receivables loans to lender Resort Funding LLC.
One of the Resort Funding cases is a dispute over timeshare payments from the former Williamsburg property. The other is for receivables from the Bahamas resort. The loan agreements leave the Holts on the hook as guarantors to Resort Funding if payments from customers aren’t collected.
Land’or and its affiliates also have numerous collections efforts and garnishments against its customers on file in Henrico County courts.
Robert Barrer, a New York attorney representing Resort Funding, said Land’or’s bankruptcy has no bearing on the two federal court cases.