BKF Capital Group Inc. (BKFG)

[Enterprising Investor]

Avon Park Air Force Range

In August 2018, the United States Department of Justice (DOJ) filed two civil complaints asserting that BKF Capital is liable for remediation costs under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). The parallel lawsuits are identical except for the location of the cleanup sites, which are in separate district court jurisdictions in Florida. The sites are located on tracts of land now known as the Avon Park Air Force Range (Avon Park). Predecessors to BKF Capital owned the land until 1942 when it was transferred to the United States Government pursuant to a Judgement on Declaration of Taking.
The claim is a remediation of certain pesticides and other chemicals used in dipping vats. Cattle dipping was widely used method to eradicate tick-borne diseases from Florida’s otherwise prosperous cattle industry. The Florida Legislature passed a law in 1923 requiring every cattleman in the state to comply with a full tick eradication program, which included dipping cattle every two weeks. The Company has valid factual and legal defenses to this claim and vigorously defended our position in response to the Complaints.

In October 2018, both parties in the Avon Park CERCLA litigation agreed to a change in venue whereby both complaints are now under the jurisdiction of the Middle District of Florida, rather than in separate district courts.

In November 2018, the parties agreed to voluntary mediation. The Company is willing to resolve the case through any available means and participated in the mediation in good faith. In connection with early mediation of this case, the parties reached a comprehensive settlement agreement in principle to resolve two civil complaints. Under the preliminary settlement, BKF will pay $725,000 covering both cases, and will receive a limited covenant not to sue on Avon Park tracts of land in the form of a comfort letter. The settlement is subject to the negotiation and approval of a Consent Decree, which will be presented to the District Court (Middle District of Florida) in the normal course. Cash payment of the settlement obligation is not expected to occur until Q2 of 2019.

http://bkfcapital.com/financials/BKF%20Capital%20Group%20Inc%20-%20quarter%20ended%203-31-19.pdf