Mediation Talks Get Underway in Dominion Club Bankruptcy Controversy

The owners and members of a bankrupt Henrico golf and country club are set to go into mediation today in an attempt to resolve the six month dispute over the club’s future.

June 14, 2011; 3:45 PM • by Michael Schwartz

The owners and members of a bankrupt Henrico golf and country club are set to go into mediation today in an attempt to resolve the six month dispute over the club’s future.

The fight over the Dominion Club began in January when the 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.

Then in April, the creditors committee, made up of Dominion Club members, filed a suit in federal bankruptcy court seeking $11.6 million from the various owner-entities, all tied to local developer 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.

Dominion Club LC and its landlord Loch Levan Land, both of which are tied to HHHunt, filed the motion to seek mediation a few weeks back. The creditors committee agreed.

So beginning today at 2 p.m. and running through tomorrow, a federal judge will sit down with the parties involved and try to work out the issues.

The mediation judge is Frank Santoro, a Hampton Roads-based federal judge famous for presiding over Michael Vick’s high profile bankruptcy. The mediation will take place at the downtown offices of LeClairRyan.

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 developments in the giant Wyndham community.

Options that have been discussed also include having the club become member-managed or even potentially member-owned.

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.

If a resolution cannot be reached through mediation, a two-day trial is set for Dec. 1 and Dec. 2 at the U.S. Courthouse downtown.