A federal judge on Friday ordered one of Gov. Jim Justice’s coal companies to surrender a helicopter within 72 hours in response to the company failing to pay a roughly $13 million judgment against it.
U.S. District Judge Robert Ballou ordered Bluestone Resources Inc., in Virginia federal court, to surrender its 2009 Bell helicopter to be sold by Colleyville, Texas-based broker Heli-X.
If Bluestone doesn’t surrender the helicopter, the British Virgin Islands firm owed the 2021 judgment may seize the helicopter with the aid of the U.S. Marshals Service, Ballou ruled in the U.S. District Court for the Western District of Virginia.
Ballou’s ruling approved sale and surrender terms proposed last month by the British Virgin Islands firm, Caroleng Investments Limited, and another creditor that had claimed interest in the helicopter.
The ruling is the latest blow to a beleaguered Justice business empire and family financial state dogged by massive debts.
Helo to be stored in Texas
The helicopter sale and surrender proposal was filed jointly last month by Caroleng and South Bend, Indiana-based 1st Source Bank.
1st Source is a creditor that had asked the court to stay an order to seize the helicopter, saying a forced sale would damage what it said is its property interest in the helicopter.
Bluestone and 1st Source had argued that sale of the helicopter, which they estimate is worth roughly $1.2 million, would be futile, since the proceeds would go first to satisfy a 1st Source $5.07 million lien, with no proceeds remaining to satisfy Caroleng’s interest.
But Ballou ruled that Caroleng had a “valid, enforceable money judgment†and that 1st Source hadn’t indicated how it would be negatively affected if a seizure order were implemented. Ballou required the parties in the case to submit a joint proposal for sale of the helicopter.
Ballou’s Friday order required Roanoke, Virginia-based Bluestone to immediately take steps to reprogram the helicopter’s transponder to allow for inflight tracking.
Pending the sale, the helicopter is to be in the custody of and stored by helicopter service provider Rotorcraft Services Group at Meacham International Airport in Fort Worth, Texas.
Upon identification of a prospective buyer, details of the sale must be communicated to the court, which would ratify the sale terms through a final sale order.
Sale proceeds are to be maintained in escrow with Oklahoma City-based law firm McAfee & Taft per an escrow agreement agreed upon by Caroleng and 1st Source. The escrow agent would operate under the court’s jurisdiction regarding disbursal of the sale proceeds, which it could make only and may make disbursals only upon further court order.
Caroleng and 1st Source said in a court filing last month Bluestone hadn’t been responsive to them in work on the proposal or suggested an alternative plan for sale of the helicopter.
Bank seeking to take trucks from Justice coal company
1st Source sued Bluestone last month for over $4.5 million, alleging breach of contract for money loaned to the company per promissory notes and other loan documents.
1st Source reported in its complaint it’s looking to seize 45 property items from Bluestone it says was collateral to secure unpaid loans.
Listed were 18 fuel, lube, haul and rock trucks; 12-wheel loaders; five dozers and tractor dozers; and four motor graders at unspecified values.
Firm said Justice company didn’t honor 2015 agreement
In June 2021, a Delaware federal court ordered Bluestone to immediately pay roughly $10.1 million, plus 9% interest from May 2020 until the sum is paid, to Caroleng, which had asked the Delaware court in December 2020 to enforce the arbitration award decided earlier that year.
Caroleng said Bluestone didn’t meet its obligations under a 2015 agreement under which it sold coal-producing property and assets to Bluestone in exchange for a cash payment, future royalty payments and, in the event that Bluestone resold any of the transferred property or assets to a third party, contingent payments.
Caroleng said Bluestone sold some of the equipment and property in January 2017, 11 days after Justice became governor, that Bluestone had bought from Caroleng, triggering Bluestone obligations under the 2015 agreement.
Liens sought on Justice interests in company
Justice’s family and business finances have taken major hits in recent weeks as he mounts a 2024 U.S. Senate run.
Last month, a surety firm asked Virginia Western District Court to approve liens on Justice’s interests in eight of his companies in response to what the firm says has been his failure to pay an $8.5 million court-ordered judgment.
Chicago-based Western Surety cited a September 2023 consent judgment in a Virginia circuit court against Justice and his Southern Coal Corp. and Bluestone Resources Inc. coal companies awarding the firm $8,557,192.
Western Surety told the circuit court Justice, Southern Coal and Bluestone Resources immediately defaulted under a forbearance agreement they entered into with Western in April 2023 to resolve prior debt, failing to make the first of 30 scheduled monthly payments of $299,525 under the agreement six days after entering into it.
Last week, a federal judge found another Justice coal company in contempt of court in a case in which the court has ruled the Justice company owes a ÂÒÂ×ÄÚÉä-based firm over $500,000 to maintain collateral for financial obligations.
U.S. District Judge Elizabeth Dillon not only found Justice’s Southern Coal Corp. in civil contempt but granted the ÂÒÂ×ÄÚÉä firm’s request for the Virginia federal court to fine Southern Coal $2,500 per day until it complies with the court’s order.
Southern admitted in November 2023 that it had failed to reimburse BrickStreet for claim payments since 2017, failed to pay BrickStreet’s invoices from May 2019 through June 2020, isn’t actively mining coal, has no income or open bank accounts, and lacks assets that can be liquidated.
Last month, a Virginia circuit court judge issued final orders denying an effort from Justice, his wife Cathy and son Jay to set aside documents they signed admitting over $300 million to Virginia-based Carter Bank & Trust, leaving them on the hook for those liabilities.
Also last month, a Greenbrier County Circuit Court judge scheduled a hearing for 9 a.m. April 12 on motions in a case in which Greenbrier Sporting Club companies that loom large in Justice’s business empire have moved to block a Carter Bank-planned auction of key club properties to help satisfy the Justice family’s debt.
