RII plans to settle lawsuits
By Russ Lynch
Star-BulletinResort Income Investors Inc. says it plans to settle lawsuits against it by paying $5 million to shareholders and giving them a share of the assets when the company completes its proposed liquidation. The Chicago-based real estate investment trust, founded by former Hawaii resort developer Christopher B. Hemmeter, has a class-action suit against it in federal court in Colorado, claiming violation of securities laws.
RII is also a defendant in an action in Delaware, alleging that officers and directors breached their fiduciary duty.
The company last week said that as part of settling its affairs it has taken over a sublease interest in the International Marketplace in Waikiki. RII said it received about $195,000 in rental income that had been held in escrow and will continue to receive about $25,000 a month in rent from the Waikiki property.
One of the lawsuits alleges that Hemmeter had a conflict of interest when he was chairman of RII. The company was set up to finance developments, mostly those by Hemmeter and his partners. Hemmeter later lost millions in New Orleans gaming ventures.
His now-bankrupt gaming development company, Hemmeter Enterprises Inc., borrowed $30 million from RII. Hemmeter resigned from RII in August 1995.
In last week's settlement proposal, RII's former auditors and the insurance company for RII's officers and directors will pay $5,050,000. Shareholders will also get 44 percent of what's left of RII's assets, either at the end of this year or when it completes its liquidation, if that comes earlier.
If the 44 percent is less than $1 million, they will get a $1 million payout instead.
The payout will be to shareholders who invested in RII after March 31, 1993, and before the end of June 1995. The settlement is subject to court approvals.
The company's shares were delisted on the American Stock Exchange in April of last year, after RII no longer met the exchange's standards. The shares are traded on the over-the-counter market.
