Kyanite settlement in sight?

Some of the uncertainty about the status of the historic Cavalier Hotel in Virginia Beach could be put to rest with the possible settlement of a series of court disputes involving the warring Dixon family from Buckingham County.

The family feud had threatened to break apart the family’s closely held Virginia corporation that profits from the mining and sale of the mineral Kyanite.

The two sides have asked the presiding judge to approve an agreement to restore the company chairman to power and buy out the minority shareholders of The Disthene Group Inc., according to documents filed with the court and lawyers involved in the case.

Part of the settlement deal calls for the sale of The Cavalier to a Virginia Beach developer for $35.1 million.

The uncertain status of the Cavalier’s ownership has posed difficulties for leaders and staff at the Virginia State Bar, who have had to explore alternative meeting locations at the Beach for next year’s VSB Annual Meeting. It is not known whether the impending resolution of the Disthene conflict might allow the hotel to commit to a booking for the 2014 Annual Meeting.

“I suppose we will learn a lot about the future of the hotels in the coming days, weeks and months. In the meantime, we have to make plans for the 2014 Annual Meeting, so the contingency plans may have to put into effect,” said Kevin E. Martingayle, chair of the VSB’s Better Annual Meeting committee. “There’s an awful lot of uncertainty right now,” he added.

VSB executive director Karen A. Gould said Wednesday she was unaware of the Disthene settlement talks and could not comment on how the agreement might affect plans for next year’s Annual Meeting.

The Disthene deal calls for the company to pay $70 million to the family members who sued and their lawyers. The agreement also sets a high payout price for the shares of all minority shareholders.

The plaintiffs in the case – Curtis Colgate and his sister Sharon Newcomb – claimed they had been treated like outcasts and offered a pittance for their interest in the company.

The payout price, $1,978 per share, is a “terrific price,” according to William Rakes of Roanoke, attorney for company chairman Gene Dixon Jr. “I would expect all of the shareholders would tender their shares at that price,” he said.

If the settlement is approved by presiding Judge Jane Marum Roush, it would end an appeal now before the Supreme Court of Virginia and vacate Roush’s order to break up the company based on findings of corporate oppression. It also would end a separate suit pending before Virginia Beach Circuit Judge H. Thomas Padrick Jr. over a related family trust dispute. The Disthene Group Inc. – now dissolved – would be reinstated as a Virginia corporation.

“This is a global settlement between the Dixon side of the family and the Colgate side of the family,” Rakes said.

“This is a huge win for the minority shareholders,” said Thomas M. Wolf of Richmond, one of the lawyers for the disgruntled minority shareholders who brought suit.

He said minority shareholders in closely held corporations usually face an uphill battle when they challenge company leadership. “The difference between this and other corporate oppression cases is our clients never gave up,” Wolf said.

A hearing is set for Monday at the courthouse in Buckingham County.

Source: http://valawyersweekly.com/vlwblog/2013/06/05/kyanite-settlement-in-sight/

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