A trustee in the bankruptcy case of Greensill Capital, a former lender to the companies owned by West Virginia Governor Jim Justice and his son Jay, has filed a lawsuit against Carter Bank & Trust, accusing the bank of receiving $226.2 million from legally improper transfers made by the Justice companies.
The lawsuit claims Carter Bank pressured the Justice companies to repay their debt
According to the lawsuit, filed in the U.S. District Court for the Western District of Virginia, Carter Bank had extended more than $750 million in loans to the Justice companies, which include coal, agriculture, and resort businesses. The loans were personally guaranteed by Jim and Jay Justice, who own 60% and 40% of the companies, respectively.
The lawsuit alleges that after the death of Carter Bank’s founder Worth Carter in 2017, the bank imposed more rigid financial practices on the Justice companies, such as cross-default provisions, cross-collateralization, and accelerated maturity dates. The bank also threatened to foreclose on the properties of the Justice companies, including the Greenbrier resort, if they failed to repay their debt.
The lawsuit claims that in order to satisfy Carter Bank’s demands, the Justice companies transferred money from their financially-strapped Bluestone entities, which had borrowed millions of dollars from Greensill Capital, an international lender that specialized in supply chain finance. Greensill Capital went bankrupt in March 2023, after its main insurer refused to renew its coverage and its main investor withdrew its funds.
The lawsuit argues that the transfers from the Bluestone entities to Carter Bank were legally improper, as they violated the terms of the loan agreements between Greensill and the Bluestone entities, as well as the fiduciary duties of the Justice companies to their creditors. The lawsuit also contends that other creditors of the Justice companies, such as First National Capital and Caroleng, representing the Russian mining company Mechel, have been harmed by the transfers to Carter Bank.
Carter Bank denies the allegations and plans to defend itself
Carter Bank has issued a statement denying the allegations in the lawsuit and calling them “false and misleading”. The bank said that it has acted in good faith and in accordance with the law in its dealings with the Justice companies, and that it has not received any improper transfers from them.
The bank also said that it has been trying to collect on its loans to the Justice companies for years, and that it has recently won a local court decision that allows it to auction off the Greenbrier Sporting Club, a luxury residential community adjacent to the Greenbrier resort, on March 6, 2024, to recover at least a portion of its debt.
The bank said that it plans to vigorously defend itself against the lawsuit and to pursue its rights and remedies as a creditor of the Justice companies.
The lawsuit adds to the financial and legal troubles of the Justice family
The lawsuit is the latest in a series of financial and legal troubles that have plagued the Justice family and their businesses, which have been accused of owing millions of dollars in taxes, fines, and judgments to various federal, state, and local authorities, as well as to vendors, employees, and other creditors.
Jim Justice, who is serving his second term as the governor of West Virginia, has maintained that he is not involved in the day-to-day operations of his family’s businesses, and that he has placed them in a blind trust. He has also expressed pride that his businesses have never declared bankruptcy, claiming that would have meant abandoning communities and employees.
However, the governor has also hinted that there may be more developments in the ongoing dispute with Carter Bank, saying earlier this month, “All I would say is stay tuned, watch what’s going to happen.”
