Justice’s coal company objects to helicopter seizure by company ‘controlled by a Russian oligarch’

A company owned by Gov. Jim Justice and his family objects to the seizure of a helicopter to satisfy debt to a Russian mining company, saying that different lenders higher up the food chain should be first in line for any proceeds from the chopper.

Jim Justice

Justice is a leading Republican candidate for U.S. Senate who first won office as governor while describing himself as “a business guy.” For many years, Justice was described as West Virginia’s only billionaire, but Forbes downgraded him after 2021 debt disputes. Justice’s recently-filed financial disclosure for his Senate candidacy lists millions of dollars in liabilities.

This debt drama is unfolding because a holding company called Caroleng, parent to the Russian mining company Mechel, contends seizure of the Bell 2009 helicopter owned by Bluestone Resources is necessary to satisfy a portion of a roughly $10 million debt. Caroleng is headquartered offshore in the British Virgin Islands.

“If a BVI company controlled by a Russian oligarch is allowed to seize the helicopter, Bluestone’s secured creditors — and therefore Bluestone, as well — will be irreparably harmed,” wrote lawyers for Bluestone Resources in a Friday federal court filing first reported by The Charleston Gazette-Mail.

Bluestone Resources, a coal-producing branch of Justice’s network of businesses, contends in the federal filing that it owes even more money to secured creditors, including about $800 million in liability that originated through loans from the international Greensill Capital that went belly up. The other lender, 1st Source Bank, is described as holding about $5 million in secured interests.

Greensill collapsed in 2021, leaving a giant financial hole in the even bigger Credit Suisse, which this year was swallowed by UBS Group AG. The liability from the Justice companies has flowed from one to the other to the other. Justice himself was personally liable for $700 million in Greensill loans. In 2022, Credit Suisse announced the outline of a plan to deal with the debt, including possible sale of Bluestone coal assets. It’s not clear where that stands.

So if the helicopter is sold, lawyers for Bluestone contend, the money would more properly flow to the secured lenders. The lawyers for Bluestone have asked for a stay of a court order last week that approved seizure of a helicopter.

“These creditors’ rights and interests in the helicopter are superior to Caroleng’s judgment lien, and there is no realistic prospect that the secured creditors could successfully pursue Caroleng in the BVI or Mechel in Russia after the helicopter is liquidated,” wrote lawyers for Bluestone.

“Because the helicopter is subject to security interests held by two Bluestone creditors, moreover, Bluestone is already contractually prohibited from disposing of it. Any proceeds from the liquidation of the helicopter, moreover, would properly flow to the secured creditors, not to Caroleng.”

The dispute is an aspect of a long-running deal gone sideways.

Justice sold the family’s coal assets to Mechel in May 2009 for $436 million in cash and 83.3 million preferred shares of Mechel stock. Justice then bought Bluestone back in 2015 for $5 million.

The most recent court filing by Bluestone calls out Mechel’s owner as an oligarch, a term generally referring to a power structure where the power rests with a small number of people.

Here’s how the filing phrases that: “In 2015, Bluestone made a major asset purchase from Caroleng, a BVI holding company of Mechel OAO, the Russian metals and mining giant controlled by oligarch Igor Zyuzin.”

The mines had closed under Mechel, but Justice reopened them.

The deal to buy back the Bluestone properties included a provision to pay Caroleng $3 a ton in royalty payments for mined coal, along with defined portions of future sales.

In court filings, Caroleng claimed Bluestone withheld the royalty payments.

Bluestone contended that it had withheld money as “setoffs” against amounts that it overpaid Caroleng. Caroleng countered that there was a clause in the companies’ 2015 sale agreement that prevented Bluestone from keeping “setoff” payments.

A three-person panel for the International Chamber of Commerce arbitrated the case in Paris, France, in October 2019, two years into Justice’s first term as governor. The panel awarded $8.4 million plus pre-award interest of $1.7 million after concluding Bluestone had “materially breached” multiple aspects of the agreement with Mechel.

In the latest filing, Bluestone says it has an active appeal of the international arbitration ruling.

Caroleng has moved on to court filings attempting to seize Bluestone assets like the helicopter.

A writ of execution filed in federal court last week instructs U.S. marshals to seize the helicopter located at the Roanoke-Blacksburg Regional Airport in Virginia “or elsewhere in this district, including all logs and records, all accessories, attachments, parts, repairs, additions, accessories, substitutions, exchanges related to the helicopter.”

And, “it is further authorized, in enforcement of this writ, for the United States Marshal and/or Judgment Creditor enter a secured space, if necessary, by force, to seize the judgment debtor’s property.”

Justice broadly discussed the liabilities of his family-owned companies during a recent state news briefing. He was responding to the mandatory financial disclosure that showed millions of dollars in personal liabilities. Justice said his family makes good on those debts.

“You’ll see a family that has worked really, really, really hard — a family that, at one time, if you’re really fair and you’ll step back from it, you’ll say ‘Well, when things were really tough, why didn’t they take bankruptcy like every coal company almost in the land that was in trouble that wrote off hundreds and hundreds of millions, if not billions, of dollars.’ And we didn’t do it,” he said.

“There’s no big pots of gold sitting around. Absolutely, at the end of the day, you can see that. And from that you can see a family that sometimes are a little late on a bill and everything, but we pay them, don’t we?”

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