An affiliate of a national resort company has taken more steps in federal court in an urgent push to have a receiver immediately placed in charge of operations of the historic Greenbrier Hotel, which is owned by Senator Jim Justice and his family.
White Sulphur Springs Holdings, an affiliate of the Omni resorts chain, is asking specifically for a professional with a national track record, Michelle Russo, to be named receiver while also laying out more detail about the caretaking the hotel company wants her to perform.
This takes last week’s initial motion to appoint a receiver and builds out the request by more specifically outlining the responsibilities. The proposed receiver would be granted exclusive control over the resort’s assets and operations to head off possibilities laid out by White Sulphur Springs Holdings of financial waste or reputational damage.
The lawyers for White Sulphur Springs Holdings said it’s important to move quickly:
“The immediate appointment of a receiver is necessary because it is common knowledge that Defendants are in dire financial straits and that the Justice Party Defendants, who control The Greenbrier Resort, routinely divert the revenue generated by the Greenbrier Resort Collateral to their other affiliated business entities.
“Accordingly, a receiver should be appointed without delay so that the value of WSSH’s collateral, The Greenbrier Resort, does not suffer further diminishment and reputational harm.”
If the judge approves, the receiver would be authorized to exclude the Justice family and their agents from possessing or operating the resort — and could change all locks on the property.
The proposal to the court would explicitly grant the receiver authority to both explore the sale of the property and file for bankruptcy.
The receiver is tasked with making sure the resort’s necessary liquor, tobacco and gaming licenses remain in effect.
“The holder of any current liquor license and/or tobacco license and/or gaming license of the Greenbrier Resort Defendants shall cooperate fully with the Receiver to allow such licenses to remain in effect,” wrote attorneys in a proposed order for the judge to set out the receiver’s duties.
“If any such license is in the Greenbrier Resort Defendants’ names, or in the name of any of their affiliates, Greenbrier Resort Defendants and Justice Party Defendants shall work with Receiver to obtain interim agreements with the appropriate regulatory agency.”
Furthermore, attorneys for White Sulphur Springs Holdings have issued official summonses to Jim Justice, his wife Cathy Justice and James C. Justice III, who goes by Jay, requiring them to respond to the financial allegations about The Greenbrier in federal court.
These are the latest steps in a rapidly evolving federal lawsuit over control of $300 million in first-lien debt on The Greenbrier Resort and related properties.
A complaint filed in U.S. District Court for the Southern District of West Virginia asks Judge Frank Volk to appoint a receiver to take full operational control of The Greenbrier Resort following the termination of a forbearance agreement.
Receivership is a court-ordered remedy where a neutral third party is appointed to manage, protect or liquidate assets during litigation or insolvency.
This has happened swiftly after a shift in control of loan documents equating to millions of dollars.
Justice and his family bought the historic Greenbrier Resort in White Sulphur Springs out of bankruptcy in 2009.
Carter Bank & Trust of Martinsville, Va., was the major lender, and financial conflict between the bank and the Justice family over and over during the past decade. Carter regularly reported that the loans were considered “nonaccrual status,” drawing no interest payments and that the debt had become an anvil.
Late last month, Carter Bank sold the loans to “an unaffiliated third party,” according to a filing with the U.S. Securities and Exchange Commission. The loan principal was $209.48 million, and Carter received $289.48 million in cash in the transaction.
The company that bought the debt was newly formed White Sulphur Springs Holdings under the authority of TRT Holdings, which owned and operated by Dallas billionaire Robert Rowling and his son Blake.
TRT’s best known asset is the luxury hotel group Omni, which operates more than 50 unique hotels and resorts across North America, known for authentic local experiences, personalized service and a distinct loyalty program.
Lawyers for White Sulphur Springs Holdings are accusing the Justice ownership group of defaulting on multiple agreements and diverting resort revenue to other businesses while failing to pay millions in taxes.
A court-appointed receiver, potentially Russo, would have broad authority to manage, operate and potentially liquidate assets that had been under the authority of the Justice family.
Under the latest motion, the receiver would take immediate and exclusive possession and control of all properties, assets and operations.
The Justice family ownership responded this week with a lawsuit in Greenbrier County that alleges that Carter Bank & Trust and TRT Holdings “are attempting to snatch The Greenbrier resort from the local ownership of the Justice family by unlawful and deceptive means.”
In turn, the latest federal filing by TRT Holdings maintains that the local lawsuit filed by the Justices demonstrates why a receiver is necessary right away.
“Accordingly,” they wrote, “the state court Complaint is nothing more than a naked attempt to backtrack on their prior contractual commitments, frustrate the collection of the $370,000,000.00, and preserve the Justice Party Defendants’ unfettered access to The Greenbrier Resort revenue for as long as possible.”