September 19, 2021

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Gov. Jim Justice Sues Bank, Alleging It ‘Induced’ His Default On Hundreds Of Millions In Loans

In a notable lawsuit filed on Memorial Day, West Virginia Governor Jim Justice – the former coal mining billionaire – accused his family’s longtime lender, Carter Bank & Trust, of orchestrating a “criminal plot” who has questioned the solvency and future of his company Reich in danger.

What do Justice, his family and company claim? This Carter Bank has lent them over $ 700 million over nearly 20 years and then the cheek expected it to be repaid on time.

According to Justice’s lawsuit, bank managers who acted in bad faith “tricked” its businesses into default (instead of continuing to extend and pretend).

In what may be the most dramatic development, Justice accuses Carter Bank of attempting to “thwart” its attempts to renegotiate the million dollar loan terms its Greenbrier Hotel owes its Greenbrier Hotel due June 1.

If the judiciary failed to provide emergency funding on Memorial Day, it’s plausible that the Greenbrier – once West Virginia’s grandest resort with more than 500 rooms – could now be behind the Carter Bank. All in all, Justice says in his complaint that he still owes Carter Bank $ 368 million.

It is hard to imagine that Justice could easily find willing new lenders. Earlier this year he sued Greensill Capital – which has given the judiciary more than $ 700 million in loans in recent years – after also refusing to continue giving the judiciary more money.

The situation remains bleak, and Carter Bank (Nasdaq: CARE) has not yet responded to the judiciary’s allegations. But given the “cross-default, cross-collateralization guarantees, waivers and clearances” that Justice claims Carter Bank has forced him to agree to over the past few years, failure of one of these justice units could result in failure of all justice -Mean business empires, including numerous coal mines, farms, and other endeavors.

Everything changed, Justice claims, after the death in 2017 of Worth Harris Carter Jr., whom Justice claims was his trusted family banker since he took out an initial $ 4.5 million home loan in 2001 would have.

“Worth Carter took an informal and personal approach to Justice Entities,” says Justice, which involved “handshakes first, then documents.”

In 2003, Worth loaned $ 12 million to Justice mining company Dynamic Energy. As of 2008, Justice had $ 70 million in loans with Carter, with 20-year repayment rates of less than 5%. When Justice sold his metallurgical coal company Bluestone to a Russian company Mechel in 2009, he deposited several hundred million dollars with Carter Bank. But instead of using those funds to pay off existing loans, Justice borrowed more from Carter – including a $ 50 million loan in 2009 when he bought Greenbrier out of bankruptcy, and $ 170 million in 2011, with which financed the acquisition of arable land.

MORE FROM FORBESThe Deadbeat Billionaire: The Inside Story of How West Virginia Governor Jim Justice Dodged Taxes and Slowly Pays His Bills

Then came bad times for the coal business. In his complaint, Justice says, “It was very clear to Worth Carter that Carter Bank would loan the Justice Entities additional funds to cover operating losses in order to weather the hoped-for temporary decline in the coal industry.”

In 2015, Carter loaned Justice $ 400 million to Justice’s mining companies, and in 2016 Justice Carter owed a total of $ 775 million. The situation for coal has only deteriorated since then.

Carter died in 2017 and “left a legacy of close, trusting banking relationships” that the bank has not continued, according to Justice’s lawsuit.

The bank’s new bosses apparently weren’t happy with a judicial handshake or the quality of its collateral, and who can blame them, considering the governor’s longstanding commitments and environmental penalties.

In October 2017, Bank Justice allegedly sent Justice a warning regarding a missed loan payment of $ 1.9 million owed by its coal companies. This accelerated the repayment of $ 268 million in loans that Carter Bank refused to renegotiate.

The judiciary alleges that through a “criminal system” of “fraudulent practices”, the bank “caused a default and created the basis for continuing to pressurize plaintiffs”.

He managed to find new funds elsewhere; In the past few years, Justice and its companies have borrowed more than $ 700 million from the competitive and bankrupt supply chain financier Lex Greensill and its Greensill Capital. justice has sued Greensill also.

Since Carter’s death, Justice has paid off debts with the bank from $ 740 million to now $ 368 million.

His lawsuit seeks $ 421 million in damages from Carter Bank, to which he claims he paid $ 238.5 million in interest and fees over the years.

Bank managers, he says, have “refused at any level” to negotiate new terms and only want to communicate through lawyers. A bank spokesman did not want to comment on the lawsuit.

Forbes reevaluated Justice’s net worth estimates earlier this year, removing him from the ranks of global billionaires, where estimates of his net worth had reached $ 1.8 billion years earlier.

The case in the U.S. District Court in the Southern District of West Virginia is named Bellwood Corp. vs. Carter Bank & Trust.

MORE FROM FORBESGovernor Jim Justice is no longer a billionaire after $ 850 million in debt to bankrupt Greensill Capital was exposed