Troubled Fones Cliffs property listed for bankruptcy sale

A view of Fones Cliffs from Virginia’s Rappahannock River. (Bill Portlock, Chesapeake Bay Foundation)

Nearly 1,000 acres of land at Virginia’s famous Fones Cliffs on the Rappahannock River will be put up for auction at a bankruptcy sale.

A listing by New York-based Auction Advisors puts the minimum bid for the property as $4.25 million in an auction to be held Nov. 3.

The 977-acre undeveloped property, which is currently owned by Virginia True Corporation, has been embroiled in difficulties since 2017, when the company purchased the property for $12 million from long-time owners the Diatomite Corporation of America.

Virginia True planned to develop a luxury golf course and resort on the property. In November 2017, however, Richmond County ordered the company to stop work after it cleared more than 13 acres of forested land near the cliffs without a permit. A lack of required stormwater controls at the site led to extensive erosion and landslides.

Virginia’s Department of Environmental Quality subsequently issued three notices of violation to Virginia True, and the lawsuit was later referred to the Office of the Attorney General.

A document filed in bankruptcy court this August lists the company owing the state $200,000 related to “governmental enforcement action.”

A four-mile stretch of striking white cliffs on the Rappahannock, Fones Cliffs are both environmentally sensitive and historically significant. Capt. John Smith recorded a hostile encounter with members of the Rappahannock Tribe that took place at the site on Aug. 18, 1608, and the area around the cliffs has become an important breeding ground for bald eagles.

In June 2019, Virginia True filed for Chapter 11 bankruptcy in U.S. Bankruptcy Court for the Eastern District of New York.

Separate litigation is also underway between two of Virginia True’s former directors, Anthony Cipollone and Domenick Cipollone, and the Diatomite Corporation of America, the former owner of the property that sold it to the current company in 2017 for $12 million.

The bankruptcy court is still reviewing plans for the company to reorganize and pay back its creditors.

Joe Pack, an attorney for the Diatomite Corporation, said in a statement that the property is being marketed for sale by Virginia True and that the bankruptcy court “will likely compare which process yields a greater recovery: the sale or the creditor-sponsored plan.”

“Highest and best offers will be received according to the bidding procedures that were approved by the court,” he said. “While still subject to bankruptcy court approval, there will likely be a dual track process in which there are creditors (including Diatomite) who are willing to sponsor a capital infusion to fund other creditors’ recoveries through a plan of reorganization.”

The property is currently zoned for agricultural use, but the sale listing notes that “a preliminary development plan (now potentially expired) was previously approved which included a golf course, lodge, restaurants, spa, 116-room hotel, commercial center, equestrian center and 718 single-family detached and townhouse units.”

The property could also “have significant value beyond development,” including mineral deposits, timber, hunting and fishing resources and conservation value, Auction Advisors noted.

Fones Cliffs’ white coloration is due to the presence of large deposits of diatomaceous earth, which is used in a range of products to deter pests and absorb and filter liquids, among other uses.

In April, more than 400 acres of land to the east of the Virginia True property were reacquired by the Rappahannock Tribe. U.S. Interior Secretary Deb Haaland attended a celebration of the reacquisition.

by Sarah Vogelsong, Virginia Mercury

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