A judge entered an order Friday directing a company owned by Gov. Jim Justice to turn over a helicopter for sale within 72 hours.
The judge’s order represented the climax of a dispute between Justice’s Bluestone Resources and Caroleng Investments, parent company to the Russian mining company Mechel that bought and sold properties with Justice. Caroleng is seeking the seizure over a debt now amounting to about $13 million already recognized and awarded in the federal court system.
U.S. District Judge Robert Ballou of the Western District of Virginia had already ruled that a 2009 Bell helicopter should be sold to pay down debt. The most recent order lays out the path to set that in motion with a sale through Helicopter Exchange, Ltd, known as Heli-X.
“Bluestone shall surrender the Helicopter to Heli-X or its named agent in an orderly manner, together with all logs and records, all accessories, attachments, parts, repairs, additions, accessions, substitutions, and exchanges relating to the helicopter, within 72
hours of entry of this Initial Sale Order,” Ballou wrote.
The entry also specified, “Bluestone shall take immediate steps to reprogram the Helicopter’s transponder to allow for inflight tracking.”
The judge also laid out a backup plan.
“Should Bluestone fail to surrender the Helicopter in the manner described, Caroleng shall be authorized to proceed with enforcement,” the judge wrote, “seizing the Helicopter with the aid of the U.S. Marshals Service, and delivering it to the custody of Heli-X.”
Justice, a two-term Republican governor running for U.S. Senate, has faced a series of major financial pressures over his sprawling family-owned businesses. Most notably, the family company’s longtime lender, Carter Bank & Trust, is trying to collect on $300 million in personally-guaranteed debt.
This case all started when Caroleng 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 said that if the helicopter is seized and liquidated then the money should instead go to different lenders higher up the debt priority list.
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 Bluestone still owed millions of dollars for the helicopter and other loans on additional property.
Bluestone and the bank estimate the helicopter’s value at $1.2 million.
After the judge’s ruling in January that the helicopter should be sold, representatives of Caroleng and 1st Source have been cooperating on a plan to move forward. Bluestone, according to filings in the case, has not participated.
Separately, 1st Source launched its own lawsuit in February against Bluestone over $4.5 million in debt and described intentions of seizing property like construction equipment.
In the helicopter case, once the sale has gone through, the proceeds will be held in escrow with arrangements for Caroleng and 1st Source to figure out.