A federal judge has ordered a helicopter owned by Gov. Jim Justice and his family’s companies to be grounded and prepared for sale to satisfy debt.
U.S. District Judge Robert Ballou of the Western District of Virginia issued the order Wednesday. His decision caps off a dispute over who has the rights to the helicopter, although there could still be claims to come on who has the first right on the money from its sale.
“The helicopter shall continue to stay where it is currently housed and may not be used or moved by Bluestone, its agents or representatives, for any purpose,” Ballou wrote.
The judge’s ruling reactivates an order for U.S. marshals to seize the 2009 Bell helicopter owned by Justice’s Bluestone Resources, which had objected.
His four-page order says the parties in the case should work together to determine how the helicopter should be sold, who should conduct the sale and who would be responsible for the initial costs of the sale.
More issues to be worked out include where the helicopter would be kept until the sale occurs, making sure the helicopter is bonded or insured until then and escrowing any funds from the helicopter until the next dispute over who is entitled to the sale proceeds can be worked out.
This all started when Caroleng Investments Limited, parent company to the Russian mining company Mechel that bought and sold properties with Justice, sought the helicopter’s seizure over a multi-million dollar debt.
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 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.
Mechel first made its debt case to a three-person panel for the International Chamber of Commerce, which arbitrated the dispute 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. Representatives of Mechel says the debt has continued to grow.
Caroleng, on behalf of Mechel, has been acting on a 2021 federal court order to enforce the arbitration award but it hasn’t been able to collect on its judgment. Liquidating the helicopter, conceivably, could satisfy a portion of the debt.
Bluestone Resources has objected to the helicopter seizure by a company “controlled by a Russian oligarch.” Bluestone’s lawyers have said that if the helicopter is seized and liquidated then the money should instead go to different lenders higher up the food chain.
One of those lenders, 1st Source Bank of Indiana, jumped in to identify itself as a lender with a perfected, first-priority security interest on the helicopter. The bank said that through October, Bluestone still owed it $5,073,809 for the helicopter and other loans on additional property.
Bluestone and the bank estimate the helicopter’s value at $1.2 million.
The judge concluded that neither Bluestone nor 1st Source satisfied the requirements to halt the sale of the helicopter.
“1st Source Bank’s argument that it wishes to maintain the status quo with its lending relationship, without any specific indication of how it will be negatively affected if the stay is lifted and the writ is executed, is not sufficient,” Ballou wrote in the order.
“As Caroleng points out in its opposition to the motion to stay, Caroleng has a valid, enforceable money judgment and the proceeds from the sale of the helicopter will be subject to all valid liens.”