Lawyers for the businesses owned by Gov. Jim Justice and his family contend a holding company cannot be sold off by court order because the full value is already owed to another big creditor.
A court filing for Justice’s Bluestone Resources this week said the properties ordered to be sold by the judge are, actually, already on track for sale to satisfy the other gigantic debt.
This is likely what Justice was referring to when he advised late last month, “stay tuned and watch what happens.”
The attorneys for Justice’s Bluestone Resources made their bigger fish argument in a federal court filing this week. The Bluestone filing came in response to a June 20 order by U.S. District Judge Richard G. Andrews of Delaware who ordered receivership and liquidation of Bluestone Mineral Inc. to satisfy at least a portion of a tangle of debt.
The case is part of a dispute between Bluestone Resources and Caroleng Investments, representing the Russian mining company Mechel that bought and sold properties with Justice years ago.
Judge Andrews ordered that shares of Bluestone Mineral “shall be sold to satisfy the judgment” in a form to be proposed by the parties to the court action within 30 days of the order — now coming up on July 20.
On the company organization chart, Jim Justice — the governor — is at the top with a 60% share alongside son Jay Justice with 40 percent. Together they have full ownership of Bluestone Resources. Below that is Bluestone Mineral, a holding company for several other Justices businesses that mostly focus on coal.
Noting that other creditors have claim to the Bluestone Mineral Inc. property, the judge wrote that “the BMI shares should be offered for sale bv the U.S. Marshal Service, or its designee, with the proceeds being used to pay Caroleng and other creditors, according to lien priority and according to Delaware law.”
One of the other creditors is GLAS Trust Company, a successor to now-defunct Greensill UK, which alleges that Bluestone owes it at least $700 million from defaulted loans.
That’s the company that the lawyers for Justice pointed to in their recent response.
The filing indicates on Nov. 30, 2023, Bluestone Resources entered into an agreement with Greensill, with its interests now represented by GLAS, that included pledging all of its assets, including shares of Bluestone Mineral. The obligations secured by that agreement, according to the filing, exceed $730 million.
Bluestone Resources “owns 100% of the BMI stock and owned 100% of BMI stock at the time the Security Agreement was executed. Accordingly, the BMI Shares are both pledged equity interests and investment property as defined by the Security Agreement and thus are subject to GLAS’s security interest.
“Indeed, GLAS, or its agents, are in possession of the BMI stock certificates. For these reasons, BMI cannot be compelled to sell the BMI Shares.”
The filing continues by saying Bluestone Resources and its subsidiaries are negotiating terms of a forbearance agreement — a financial arrangement that allows a borrower to temporarily delay or reduce loan payments because of financial hardship — that will mean appointing a chief restructuring officer to oversee liquidation of the collateral possessed by GLAS “and the assets of all entities subject to GLAS’s substantial claims.”
“A significant shortfall from the sale of this collateral is expected Since it is anticipated that all assets of the Judgment Debtor will be liquidated under the supervision of a CRO, there is no need to appoint a receiver to oversee the sale of those assets.”
Last month, MetroNews asked Justice what a forced sale of a branch of his family-owned business network would mean. Justice’s response at the time specifically mentioned Credit Suisse, which held the Greensill debt, as a major player in the situation. Credit Suisse was purchased by the Swiss bank group UBS.
He alluded to the longstanding conflict with the Russian mining company Mechel now colliding with the enormous Greensill/Credit Suisse debt.
“And literally the dispute with the Russians and the idea that they can now because of a federal judge has done this and that and the other thing they can sell parts of Bluestone or whatever like that, the folks at Credit Suisse and UBS have the first in regard of all of this,” Justice said.
His remarks included the advisement, “What I would tell you is if you are going to report something that is basically just a hit job, I would do my job if I were you. You need to stay tuned and watch what happens.”