West Virginia’s state tax department has moved to intervene in a lawsuit over control of The Greenbrier Hotel because of liens it has issued over about $4.4 million in unremitted taxes.
Lawyers for the state tax department say intervention is necessary to protect West Virginia’s claim on millions of dollars owed by Greenbrier Hotel Corp.
“The Defendants owe millions in unpaid Consumers Sales and Services Taxes to the Tax Division,” wrote the lawyers for the state.
The historic resort is owned by Senator Jim Justice and his family, who purchased The Greenbrier out of bankruptcy in May 2009. Since then, it has remained a central asset of the Justice family business empire even as financial troubles have swirled.
The West Virginia Tax Division has repeatedly filed liens against The Greenbrier for unpaid taxes. Most represent sales taxes collected from customers but not remitted to the state. The federal court filing generally describes “millions of dollars,” but an attachment outlining the liens adds up to $4.4 million.
The attachment includes records of 10 liens filed on behalf of the state in Greenbrier County from last September through this April:
Lien #1795873: $535,143.17
Lien #1813993: $568,459.47
Lien #1831210: $2,253.99
Lien #1813992: $589,073.46
Lien #1813991: $602,481.11
Lien #1813990: $592,296.74
Lien #1813989: $602,501.78
Lien #1813409: $459,606.48
Lien #1802982: $30,222.31
Lien #1799863: $455,070.11
That final one, issued in February, says it represents personal income tax withheld from wages that were paid.
Steve Ruby, a Charleston attorney who regularly represents the Justices, said the tax matter is under control.
West Virginia businesses that cannot pay their full tax liability can request a payment plan through the state.
Over the past couple of years, the state tax department has regularly withdrawn some liens on The Greenbrier while adding others.
“The Greenbrier is under an agreement with the state regarding its tax obligations. It is in full compliance with its obligations under that agreement and will complete all the agreement’s requirements in short order,” Ruby said.
The ongoing tax debt issue is a point in a bigger federal court fight that has erupted between the Justices and an Omni hotels affiliate that purchased almost $300 million on first-lien debt on The Greenbrier and associated properties.
White Sulphur Springs Holdings, a corporate cousin of Omni, filed for receivership of the resort in a federal court case. The debtholders contend The Greenbrier, representing their collateral, needs a third-party caretaker to assure the resort’s value is preserved.
The federal court filings by White Sulphur Springs Holdings do cite the history of tax liens while making a broader case of significant financial delinquency, characterizing the pattern as evidence of “waste, fraud and abuse” by the resort’s current management.
White Sulphur Springs Holdings argues that the failure to meet the tax obligations risks additional liens being placed on the resort.
Now, the state tax department itself is asking to enter the federal case. Lawyers for the tax department filed a motion to intervene this week, along with a memorandum laying out the reasons.
Lawyers for the state say that because a receiver has been requested to manage the defendants’ assets, the existing tax liens claimed by the state tax department must be prioritized and protected during the litigation.
It’s necessary to intervene, wrote the lawyers for the tax department, because no other party currently represents the government’s financial interests.
“A tax lien is a substantial interest in property, sufficient to merit intervention. No other party currently represents this interest in this litigation,” wrote lawyers for the state.
The tax department says it’s trying to ensure that the statutory tax liabilities are satisfied before the Justices’ remaining estate is depleted by other legal claims.
“The assertion of a lien on a piece of property before the court is a sufficient reason to allow intervention,” wrote the lawyers for the state.