Lender wins fight for control of some Hild properties in Manchester

The shuttered Dogtown Brewing building is among the five properties now under control of a receiver. (BizSense file)

In a legal victory for a local lender, a handful of Manchester-area properties tied to embattled Richmond businessman Michael Hild are now in the hands of a court-appointed receiver and headed toward a sale.

Virginia Credit Union last month prevailed in its bid to put a receivership in place and gain control of five South Richmond properties owned by Church Hill Ventures, the LLC used for years by Hild and his wife Laura for their real estate holdings.

The properties in question are 1200-1206 Hull St.; 1209 Hull St.; 1213 Hull St.; 2010 Maury St.; and 1124 Bainbridge St.

The Hull Street properties include the buildings that house the Hilds’ shuttered Dogtown Brewing Co., Hot Diggity Donuts and Butterbean café. The Maury Street property is a small single-family home and the Bainbridge parcel is an unfinished lot.

The café and donut shop buildings also house apartments on the upper levels, some of which are actively rented.

VACU, through affiliate VACU Resolution LLC, first filed suit against CHV and Hild in December. The case argued CHV was in default on five loans, all of which were collateralized by the properties and personally guaranteed by Hild, who at the time the loans were issued was owner and CEO of fast-growing local reverse mortgage company Live Well Financial.

Butterbean Cafe, like the neighboring Hild businesses, has been closed since March 2020.

The loans fell into default months after Live Well was forced into bankruptcy by several large lenders and Hild was subsequently charged and convicted in a criminal fraud case that federal prosecutors called a massive reverse mortgage bond pricing scheme that toppled the firm.

The lawsuit’s ultimate goal was to allow VACU to take possession of the real estate, likely through foreclosure, and then sell it off to help satisfy the balance on the loans, which stands at around $6.2 million.

VACU successfully sought to have Peter Barrett, a seasoned local attorney and bankruptcy trustee at the Kutak Rock law firm, appointed as receiver to oversee the properties and prepare them for a sale.

The sale is expected to be done through auction after either a foreclosure or exchange of the deeds in lieu of a foreclosure. It’s unclear from the court proceedings when a sale might take place.

Hild and CHV were represented in the case by local attorney Brad Marrs, who did not respond to a request for comment for this story.

VACU is represented by Robert Chappell of the Spotts Fain law firm. Chappell declined to comment.

Barrett, the receiver, also declined to comment.

Barrett promptly hired locally based Peak Property Management to begin to run the day-to-day of the properties, including collecting rents, handling any needed repairs and getting their financials in order. Representatives of Peak could be seen onsite at some of the properties last week.

While the timeline for a sale is unknown, the receivership makes the future of the properties less foggy, after they had been held in limbo for years as Hild’s legal battles have dragged on.

Michael Hild (BizSense file photo)

Hild pleaded not guilty in his criminal case and has continued to proclaim his innocence while fighting his conviction and 44-month sentence in federal appeals court. His appeals process is pending.

Live Well’s bankruptcy liquidation also continues in Delaware federal court, where the trustee, the Hilds and creditors have fought over control of some of the Hilds’ personal assets. Federal prosecutors and the Live Well trustee claim Hild used ill-gotten funds from Live Well to purchase much of the Manchester real estate.

Both the federal government and the trustee are asking for tens of millions of dollars from Hild. His wife and their various LLCs are also party to a lawsuit in the bankruptcy case.

VACU navigated those legal complications by settling with the Live Well trustee, agreeing to pay $275,000 to the bankruptcy estate in order to be freed up to go after the five properties.

Those properties were not among the Hilds’ assets still frozen by the government as part of the criminal case. VACU also procured a letter from the federal government that stated it would effectively not impede the eventual sale or litigate the eventual buyers.

The receivership order was approved by Richmond Circuit Court Judge Claire Cardwell on May 23. The order followed an hourslong hearing on April 29 where attorneys for VACU and Hild’s camp argued their case.

Hild’s camp, in addition to arguing that VACU didn’t have a right to receiver, stated during the April hearing that he and his wife had the ability to sell the properties on their own and payback VACU what it is owed while maintaining their equity.

“We are ready, willing and able to sell,” Hild’s attorney, Marrs, said during the hearing.

Marrs claims the true value of the subject properties “is far in excess of the amount of debt owed to Virginia Credit Union.”

“The credit union is over-secured here,” Marrs argued. “And there’s just no reason to take this out of the Hild’s control when they’re doing everything they can to move these things to market and sell them.”

Michael Hild and his wife Laura.

He said the Hilds have had the ability to sell the five properties all along but were waiting for the historic tax credits they used to renovate the buildings to mature so they could avoid tax consequences.

Marrs said the Hilds had continued making payments on some of the loans to VACU, despite the defaults.

“There’s never been a turning back on the credit union,” Marrs said of his client. “There’s never been a nonpayment, and there’s never been a time when the Hilds forgot their obligations or did not remain committed to paying the bank – the credit union in full.”

The loans went into default because they had matured and had not been either paid in full or refinanced. They became due in full upon their default.

Hild, who has personally been managing the couple’s real estate holdings over the last several years, took the stand at the April hearing,

He said he thinks CHV’s properties are worth far more than the assessed value but admitted that he currently doesn’t have sufficient assets to repay the loans to VACU.

Chappell, addressing the judge at the April hearing, explained why VACU sought a receivership.

“We’re sitting here with impaired, due-in-full loans on our books and we’re simply a normal, rational, commercial party that wants out of a nightmare scenario that has been created for us by the criminal and other problems of Mr. Hild,” Chappell said.

“And we have the clear path to sell these properties through a well-advertised commercial auction process or a receivership sale that will maximize the value. We’ll have a property manager that will get us good numbers on how the properties operate so investors can have confidence in placing their bids.”

Judge Cardwell ultimately cited the fact that the loan documents in question explicitly state that VACU has a right to the appointment of a receiver in the event of a default.

“The defendants have admitted they are in default under the ‘loan documents’ and have not presented persuasive evidence or argument as to why this court should not enforce this provision,” Cardwell wrote in her opinion.

Hild’s legal troubles began when he was indicted and arrested in the summer of 2019 and convicted by a jury in federal court in Manhattan in April 2021. Though the judge sentenced him to 44 months in federal prison, Hild has remained free on bond since his arrest nearly five years ago.

His appeal seeks to overturn both his conviction and sentence.

Marrs told Judge Cardwell during the April hearing that Hild and his wife are optimistic about the chances of his appeal and potentially ending his long legal battle.

“The clouds are starting to lift for the Hilds,” Marrs said. “The appeal is something for which they are very hopeful.”