ROANOKE, Virginia – An Indiana-based bank has sued a coal company owned by Gov. Jim Justice for more than $4.5 million on unpaid loans.
And in yet another federal lawsuit, a trustee for one of Justice’s creditors sued the Justice companies' longtime banker that also is trying to collect more than $300 million from companies owned by the governor’s family.
1st Source Bank filed its federal lawsuit February 14 accusing Bluestone Resources Inc. of breach of contract.
In a subsequent filing the next day, the bank listed 45 items of Bluestone property it wants as collateral to secure the unpaid loans. That filing lists mostly construction equipment including 18 trucks, 12 wheel loaders, five dozers and four motor graders.
On February 2, a separate proposal filed by 1st Source and Caroleng Investments Ltd. would have Justice’s Bluestone Resources surrender a company helicopter for a court-ordered sale to help pay for a $13 million judgment against in from 2021 related to Bluestone’s failure to meet the terms of a coal production agreement.
Caroleng and 1st Source previously contested each other’s claims to the 2009 Bell helicopter. But, they filed the joint proposal February 2 to require Bluestone to surrender the copter to Texas-based broker Heli-X for sale.
Caroleng, which is based in the British Virgin Islands, has sought the helicopter after Bluestone failed to pay the $13 million 2021 judgment, but Indiana-based 1st Source had asked the court to stay the seizure order because it said selling the helicopter would damage its interest in it.
Last month, U.S. District Judge Robert Ballou of the Western District of Virginia denied Bluestone’s motion to stay a court order seeking to have federal marshals seize the helicopter, which is estimated to be worth about $1.2 million.
The February 2 joint order filed would allow Caroleng to proceed with the seizure of the helicopter and deliver it to Heli-X if Bluestone doesn’t do so. Sale proceeds would stay in escrow until liens and title transfer are finished.
And in the other federal lawsuit filed February 12, GLAS Trust Company, a trustee for one of Justice’s creditors, sued Virginia-based Carter Bank & Trust, Justice’s longtime banker that also is trying to collect more than $300 million from companies owned by the governor’s family.
GLAS says Carter Bank’s actions forced the Justice companies to transfer money from Bluestone, which had borrowed the money from lender Greensill which went bankrupt when Bluestone couldn’t pay. GLAS wants $226.2 million from transfers it calls improper made to Carter Bank.
The bank noted the lawsuit in a February 15 filing with the U.S. Securities and Exchange Commission.
“The company and Carter Bank strongly believe that the factual allegations in the lawsuit regarding transactions involving Carter Bank are false and misleading, and the company and Carter Bank vehemently object to GLAS’s attempt in the lawsuit to question these repayments,” stated representatives for the bank. “The company and Carter Bank deny the allegations contained in the lawsuit and intend to defend vigorously all claims asserted in the lawsuit.
“Based on information presently available to the company and Carter Bank, the company believes that Carter Bank has meritorious defenses to all allegations contained in the lawsuit; however, because the lawsuit is in its early stages, no prediction can be made as to the ultimate outcome thereof.”
GLAS claims BlueSeeking more financing to support its metallurgical coal properties, Justice’s Bluestone in 2018 entered a supply chain financing agreement with Greensill UK. Over time, Greensill advanced Bluestone more than $700 million.
GLAS claims Bluestone and the other Justice entities used money from a $700 million advance from Greensill to pay off Carter loans.
“With the property of their other businesses, as well as their own personal finances on the line, the Bluestone owners chose to use the funds advanced by Greensill UK — in addition to the legitimate use of repaying Bluestone Resources’ own debt to Carter Bank — to repay hundreds of millions of dollars of Carter Bank debt on which the Bluestone Entities themselves were not obligated,” the complaints states, also claiming Carter Bank “‘forced’ the Justices to make these unlawful transfers anyway.”
When Bluestone couldn’t pay Greensill, it had to declare bankruptcy. GLAS says Bluestone still owes $700 to Greensill.
GLAS seeks compensatory damages from Carter Bank for the allegedly fraudulent conveyances by Bluestone to Carter Bank as well as other relief.
