West Virginia’s historic Greenbrier Hotel could be auctioned in a foreclosure sale later this month on the county courthouse steps — a stunning possibility after loanholders for Gov. Jim Justice and his family declared their most recent financial agreement to be in default.
The lenders who are going to the mat over The Greenbrier contend the Justices failed to live up to the terms of an agreement from Dec. 29, 2023, giving the Justice businesses greater leeway on their loan payments. Such a forbearance agreement can help borrowers who are experiencing financial difficulties, but the agreements usually give lenders greater enforcement leverage too if the borrowers fail to live up to the terms.
The forbearance agreement, which is one of the documents on file as part of a $40 million lawsuit against the Justices in New York, reveals a number of key terms between the Justice companies and their lenders: the amount that was supposed to be paid down monthly, the history of default and potential default lines that still could be crossed — plus a clause meant to limit lawsuit options for the Justices.
Justice, in Friday remarks during a state news briefing, described the situation as unfair: “What’s going on here is, to be perfectly honest, just rotten.”
Justice, at one point considered West Virginia’s only billionaire, built his political brand on his business acumen — and a major factor in that has been his reputation since he bought The Greenbrier out of bankruptcy in spring of 2009.
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The two-term governor is now a Republican nominee for U.S. Senate and is considered the frontrunner because of his broad name identification and West Virginia’s recent voting trends. He is aiming to succeed Senator Joe Manchin, an independent who still caucuses with Democrats, in an evenly-divided chamber. Justice’s campaign is entering the home stretch of an election that will culminate Nov. 5.
The Justices have contended lender JPMorgan Chase has acted in bad faith by selling the financial agreements, including the deed of trust, for The Greenbrier to collection company McCormick 101. Further, the Justices have alleged the chief of JPMorgan Chase was acting through political motivation, although no specific evidence has been offered to explain why the financial company would act on political motivations, rather than financial ones.
“It’s about trying to twist Jim Justice or hurt Jim Justice from a political standpoint. There is no question it’s about anything but that,” Justice said Friday during a news briefing about his administration’s activities.
“If it were not that, would you not think that we would have gotten a call from JPMorgan saying we’re going to sell this loan?”
A lawsuit filed in coordination with the foreclosure sale contends the Justice companies defaulted on their loan terms several times, including multiple instances in 2018 and failed to meet terms under the 2023 forbearance agreement. Finally, the lawsuit contends the Justices failed to pay the loan in full this past June 28, the maturity date.
Governor Justice’s signature is on the top line of the forbearance agreement among those responsible for the terms on the Justice side. He was the recipient of a default notice mailed to his home address in Lewisburg this past April.
The default notice from the financial giant JPMorgan Chase underscored that prior defaults had not been resolved and indicated the Justices had now gotten out of whack with the latest terms.
“As a result of the Forebearance defaults,” the loanholder said, “all obligations under the Loan Documents are immediately due and payable.” Furthermore, representatives of JPMorgan Chase wrote, the financial company would be immediately entitled to enforce its rights.
Justice, on Friday, called all of that unfair.
“It is a problem, and we’ve got to deal with it — and it’s not very fair,” Justice said. “It almost approaches blackmail. But with that being said, we’ll deal with it. Some way, somehow we’ll deal with it.”
Justice noted in his comments that the loan had a $9.4 million final payout, which meant that millions of dollars had already been paid down from its original sum.
“What happened was, totally unbeknownst to us, they sold the loan. Well, it makes no sense unless it was politically driven a hundred percent,” Justice said.
Here are some notable nuggets from the agreement the Justices reached with their lender late last year:
$142 million original loan: The filing lays out a history of the $142 million loan agreement being struck with JPMorgan Chase in 2014. It also outlines updated agreements put in place since then.
As of Nov. 30, 2023, the principal was $25,119,527.16, according to the document. Accrued interest at that point was $13,808,762, plus additional attorneys fees.
New terms: The forbearance agreement signed at the end of 2023 was structured to give the Justices financial breathing room through Sept. 30, 2024, as long as there was no default on the terms of the new agreement. In the mean time, JPMorgan Chase agreed to lay off on the previous defaults.
Starting Dec. 31, 2023, and running until Sept. 30, 2024, debt payments were supposed to be $100,000 a month.
There was supposed to be an additional principal amount on or before Sept. 30 of $9.4 million.
The agreement also called for monthly interest payments under a calculation defined in the document plus $50,000 a month payments on fees and expenses.
Other directives: The agreement directed the Justice companies to actively seek to refinance the debt secured by collateral on The Greenbrier. The Justices were also supposed to actively market and sell their ownership of Glade Springs Resort in Raleigh County. The Justices were supposed to provide regular updates about the status of all their financial holdings.
Default terms: The signed agreement laid out terms that could be considered defaults on the new terms. One was the failure to make any designated payment, including on the interest. Another would have kicked in if the Justices had sought voluntary bankruptcy.
Another possible default would have occurred if any other entity — with the exception of a longstanding conflict with the Glade Springs Village Property Owners Association — had foreclosed on the collateral.
The terms also included a clause that if confessions of judgment filed by longtime Justice lender Carter Bank & Trust were upheld or if Carter Bank were to move ahead with judgment proceedings on the claims then that would constitute a default. In January, a Virginia judge ruled in Carter’s favor on $300 million in claims. In late June, the bank and the Justice companies announced a resolution to the dispute. Carter still characterizes almost $300 million as distressed loans.
Rights and remedies: The agreement indicates that in the case of a forbearance default, all obligations would be immediately due and payable.
Loanholder claims default: JPMorgan Chase sold the loan documents, including the deed of trust, to a collection company, McCormick 101, which then filed both for the foreclosure sale of The Greenbrier and a $40 million lawsuit against the Justices in New York. McCormick is asking for what remains of the loan, which its lawyers calculate to be $24 million in principal and $16 million in interest.
The lawsuit rattles off several events of default including prior failures to make payments in 2018, cross defaults, failure to make the payments due under the forbearance agreement, failure to make the interest payments under the agreed terms, failure to pay attorneys fees and failure to pay the loan in full — plus default over the Virginia court ruling that held the Justices responsible for the confessions of judgment filed by Carter Bank & Trust,
Bottom line, according to lawyers for the credit collection company: “Justice failed to repay the loan in full.”
No sue clause: The agreement includes a stipulation to curtail the Justice companies’ ability to file a lawsuit over the financial arrangement. The signed agreement says, “This constitutes a ‘covenant not to sue'” that applied to the borrower, the Justices.