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Koll Pays $22 Million, Settles Lawsuit With 2 Former Affiliates : Litigation: The companies had sued the Newport Beach firm for what they said were its share of $72 million owed to the IRS.

February 08, 1995|ROSS KERBER | TIMES STAFF WRITER

NEWPORT BEACH — Koll Real Estate Group Inc. said Tuesday that it has paid $22 million to settle a tax dispute with two New Hampshire companies that were once its affiliates.

Koll had said previously that it would appeal a December decision in a Delaware court. The judge had ruled that Koll owed the two companies payments under various tax-sharing agreements related to the spinoff of all three entities from Henley Group Inc. between 1988 and 1992.

Raymond Pacini, Koll's chief financial officer, said Tuesday that the company decided instead to settle the suit to avoid the costs of continuing litigation.

The settlement will not affect Koll's current operations, Pacini said, which include a project to build as many as 3,300 homes in the Bolsa Chica wetlands in Huntington Beach. That project was approved by the Orange County Board of Supervisors in December.

Koll said it has arranged to finance $15.5 million of the settlement it made this week and has paid the rest with cash on hand. "It's a lot of money, but we thought it was appropriate," Pacini said.

The suit was filed by Wheelabrator Technologies Inc. and Abex Inc., both based in Hampton, N.H. Neither company is involved with Koll's real estate development business.

The suit is based on an audit completed in 1993 by the Internal Revenue Service of the purchase and resale of a stake in Santa Fe Pacific Corp. by Henley Group. Although Henley had reported a loss on the transaction, the IRS found there was a gain and filed suit against Henley's successors.

Wheelabrator and Abex in turn sued Koll for what they said was Koll's share of the $72 million owed to the IRS. Koll had previously said its current management should not be responsible for the tax-sharing agreements reached by previous executives.

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