One of the best-known companies in the Twin Cities grocery market — Lunds Inc. — is caught in a bitter court battle among its sibling owners.

Kim Lund, the oldest of two sisters and two brothers who own the Lunds & Byerlys chain, wants to cash out her one-quarter stake. But the $21 million-plus offer she got from Lunds — whose CEO is her brother Russell "Tres" Lund — fell well short of the $80.4 million she claims she's due.

Kim Lund's lawyers argue that Lunds is offering her a "fire sale" price that "lacks credibility." Lawyers for Lunds argue that Kim's valuation "is a fairy tale," and that the company would have to borrow heavily to pay for it.

Ultimately, Hennepin County Chief Judge Ivy Bernhardson will settle the dispute, as Kim Lund's lawsuit against Lunds Inc., Tres Lund and some Lunds insiders went to trial Tuesday.

To buy out Kim Lund's interest at $80.4 million, Lunds would need to take on a "crippling" amount of debt — at the same time the Twin Cities grocery market is getting more competitive with new entrants like Hy-Vee, Steven Wells, an attorney representing Lunds, told the court Tuesday. "They have been flooding into the Twin Cities, and it ain't over."

Lunds has "zero long-term debt," Wells said. "That has been a critical factor in the success of this company."

Janel Dressen, an attorney representing Kim Lund, said that there are other ways besides debt to finance a buyout of Kim's stake but that Tres Lund won't consider them.

The company could sell Kim's stake to a "strategic" — or nonfamily — buyer or raise money through a partial stock offering. "No options have even been pursued," Dressen said. "Why? Tres Lund doesn't want to give up control."

The Lunds name dates to 1939 when the four siblings' grandfather — Russell T. Lund Sr. — opened a grocery store on Lake Street in Minneapolis. Lunds grew into a small chain and merged with Byerly's in 1997. Today, the company has 26 stores that cater to a higher-end slice of the grocery market.

Lunds has added stores in recent years and gained market share, which currently stands at about 10 percent in the Twin Cities, according to testimony on Tuesday.

Tres Lund is the only one of the four siblings who's involved in the Lunds business. He took over as head of the company in 1991. A year later, Tres' grandfather died. So did his father, Russell Lund Jr., who died by suicide in a hospital psych ward after allegedly killing his estranged wife Barbara and her boyfriend.

Through a series of trusts, Russell Lund Sr. gave equal control of the supermarket market company to his four grandchildren — Kim, Tres, Shauna Lund McFeeley and Robert Lund. The four get annual cash distributions.

Kim Lund had first talked of cashing out some equity as early as 1992, and the topic would come up on and off over the years, according to court filings. From 2006 to 2008, the Lund siblings held several family meetings, with the assistance of wealth counselors from JPMorgan Chase.

But those family planning efforts were put on hold in 2009 after the death of Pat Lund, Russell Lund Sr.'s wife, court records say.

After Kim's repeated attempts to cash out her holdings, she sued in late 2014 in Hennepin County District Court. The suit claims Tres Lund placed his "conflicted" motivations ahead of her interests to "lock" her in as a shareholder and reduce her options for liquidity.

"The relationship between Kim and Tres has greatly deteriorated, and they have not spoken meaningfully for the past several years," according to a trial brief submitted by Kim's attorneys.

Kim Lund claims in court papers that Tres and other defendants have "intentionally" tried to depress the value of the company in the past few months to create an impression they can't pay her the full value of her shares.

Their brother, Robert Lund, in an affidavit filed in court, said that however the matter with Kim is disposed, he does not want Lunds to be sold or taken public in a stock offering, calling the company "an important legacy of our family in the Twin Cities."

In the metro area's grocery wars in recent years, Lunds has been a winner. The company's net sales grew from $514.8 million in 2011 to $659.6 million in 2015, according to a court-filed report by a financial consultant hired by Kim Lund.

Still, Lunds' net income in the past five years peaked at $19.9 million in 2013 and then fell to $11.4 million in 2015, said the report, which cites Lunds' own audited financial reports.

Since 2013, Lunds has faced increasing competition from the likes of Hy-Vee, Fresh Thyme and Trader Joe's. Des Moines-based Hy-Vee alone has opened five stores in the metro area since September 2015, and at least three more are slated to open this year.

Total grocery store square footage in the seven-county Twin Cities metro area has grown from around 10 million to nearly 14 million, according an analysis by Burke & Associates submitted in court records.

With the competition rising, Lunds has pulled back its expansion plans, the company's attorneys said in a court filing.

Mike Hughlett • 612-673-7003