Governor Justice’s companies challenge the way their bank has claimed $300 million in debt

Companies owned by Gov. Jim Justice and his family are challenging how their longtime banker is going about collecting on more than $300 million in debts.

The renewed dispute with longtime lender Carter Bank & Trust is one of several concurrent financial flashpoints for the governor’s companies, right as he gears up a high-profile bid for U.S. Senate.

Justice and the bank were at odds over $368 million of debt in 2021, a conflict that cooled off later that summer when the governor announced a resolution. “It’s a real positive resolution,” Justice said then.

Now the dispute is back.

Carter Bank last month filed confessions of judgment, written and signed agreements accepting liability in instances of default. In such circumstances, the note may be presented to the court without even notifying the debtor or having a hearing. By signing, borrowers may sacrifice their right to be heard in court.

Lawyers for Justice’s companies on Friday filed motions to set aside the confessed judgments in 11 cases in Martinsville, Virginia.

The filings contend that enforcing the judged confessions is a radical step and that the Justice companies deserve a chance to offer a more detailed defense.

“Confessed judgements are one of the ‘harshest legal tactics’ available to creditors, as such provisions waive a party’s right to notice and opportunity to be heard as dictated by the Fourteenth Amendment,” wrote attorneys for the Justice businesses, referring to due process guarantees.

“Defendants therefore must, as a matter of state law and due process, be afforded an opportunity to establish those defenses in the ordinary course, by having this matter placed on the trial docket.”

The dispute blew back open last month when Carter Bank filed to collect on confessed judgments adding up to $302 million, plus interest and attorneys fees, in Martinsville Circuit Court in Virginia. The claims cited personal guarantees by Governor Justice, his wife Cathy and their adult son Jay, who is the named executive of the family’s coal operations.

The confessed judgments filed by Carter Bank apply to loans on James C. Justice Companies, Justice Family Group, Greenbrier Hotel Corp., Greenbrier Golf and Tennis Club, Greenbrier Sporting Club, Players Club LLC, Oakhurst Club, Greenbrier Medical Institute, Justice Low Seam Mining, Twin Fir Estates and Wilcox Industries.

Those loans had come due April 15.

The Justice companies immediately responded to the bank’s claim on the evening of April 21 by putting out a two-page statement about “obstructive conduct” by Carter Bank.

The statement by Jay Justice said the companies have been “unable to reach agreement with the bank despite having secured a refinancing opportunity that would pay Carter Bank $250 million in immediate cash and provide a path to completely pay off the companies’ Carter Bank loans within months.”

The statement said that refinancing proposal would retire seven of the eleven loans held with Carter Bank and result in an immediate cash payment of more than $250 million to the bank. The businesses’ remaining four Carter Bank loans, totaling about $57 million, would be secured by collateral appraised at more than $325 million, the statement said.

“Our companies’ refinancing plan would immediately pay off several of our loans with Carter Bank and set the stage to quickly eliminate all the remaining loans, but the bank has blocked those efforts, instead seeking to stop us from refinancing our loans with other lenders,” Jay Justice stated.

In response to that public statement, lawyers for Carter Bank filed a motion for preliminary injunction and cited a nondisclosure agreement. “The Improper Press Release disclosed the details of the loan obligations, the Justice Entities’ offer, and certain negotiations between the Parties,” wrote lawyers for the bank.

The judge, Giles Carter Greer of the circuit court for the City of Martinsville, issued an order May 2 in favor of the bank. The judge concluded it’s likely the bank will succeed on the merits on the dispute over the nondisclosure agreement.

This dispute has rekindled while the Justice family businesses are juggling additional financial issues such as the sale exploration of their coal operations to settle a debt with international lender Credit Suisse and the garnishment of the governor’s wages over still another, $850,000 debt that is subject to a signed personal guarantee.

In yet another longstanding dispute with Justice holdings over a judgment of at least $18 million, Fivemile Energy Company of Kentucky has asked a federal judge for expedited consideration because of the other major financial pressures on the Justice family businesses.

In that case, which originally focused on mineral rights leasing, the parties are currently arguing over how much money the Justice companies even have at their disposal and whether they’ve been forthcoming about their actual financial situation.

The Fivemile filing cites the possible imminent sale of the Justice coal properties as well as the press release that raised the possibility of paying down millions of dollars of the Carter Banks debt.

“In recent months, these same companies have been representing to this court that they were so poverty stricken that they could not pay off much smaller amounts awarded by the court to the plaintiffs,” wrote lawyers for Fivemile, which has been in the federal court dispute with the Justice properties since 2012.

Lawyers for the Justice companies have objected in that case that they lack the ability to pay, maintaining that economic headwinds over the past decade have whittled more than 100 coal and farming companies to just a dozen now actively operating.

The companies in that case suggest that “operating cash is chronically scarce and transferred among companies on a just-in-time basis.”

Lawyers representing the Justice companies, in a recent filing, noted that depositions by company representatives “painted a consistent portrait of a somewhat disorganized organization whose resources are stretched to the limit with respect to both finances and personnel. The cash that comes in is almost immediately transferred from those entities that have it to those that need it.”

Governor Justice, who was once described as West Virginia’s only billionaire, last month announced his candidacy for the Republican nomination for U.S. Senate.

Asked prior to the announcement whether he would contribute significant amounts of his own money toward his campaign, Justice indicated he will not self-fund. 

“This needs to be an all-in approach. Everybody should be all in,” Justice said of funding the campaign.

“I really run off of other people’s energy. And to just sit back and handle this on my own, I’m not going to do that at all.”





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