Justice family may cede control of The Greenbrier to resolve $300M debt

WHITE SULPHUR SPRINGS, W.Va. (WVVA) - U.S. Sen. Jim Justice and his family may give up controlling interest in The Greenbrier resort as part of a refinancing agreement intended to resolve a debt of nearly $300 million.

Documents submitted to the West Virginia Lottery Commission show the deal would create a new company — jointly owned by the Justices and New York-based Kennedy Lewis Investment Management — that would hold 51% ownership of the White Sulphur Springs resort, according to lottery commission acting director David Bradley.

A five-member board of directors would govern the new company, with Kennedy Lewis appointing three members and the Justices appointing two.

Casino closure threatened amid delays

Justice family attorney Steven Ruby said the Lottery Commission’s approval is one of the final obstacles to closing the deal. Ruby said delays are costing the Justice family $145,000 per day and that, as a result, the family planned to shut down The Greenbrier’s casino and lay off 90 workers until the commission acts.

However, letters exchanged Friday and Thursday between Bradley and Ruby indicated the two sides may have found a path to keep the casino open until the commission can consider the license at its Aug. 26 meeting.

Missed court deadlines

The refinancing effort follows multiple lawsuits over the property. Chief Judge Frank Volk of the U.S. District Court for the Southern District of West Virginia paused those suits in May to allow the Justices to pursue refinancing through Kennedy Lewis, setting an initial deadline of July 16.

After the Justices’ attorneys requested an extension, Volk extended the deadline to Aug. 7. That deadline also passed without resolution, prompting Volk to order the Justice family to explain the status of the refinancing by Friday.

Background on the litigation

White Sulphur Springs Holdings LLC, a company owned by the Omni Hotels chain, filed suit in federal court seeking to remove the Justices from the resort and appoint a receiver to manage the property. The company said it purchased a $500 million debt from Martinsville, Va.-based Carter Bank and Trust.

The Justices filed a separate suit in state court alleging the Omni-owned company fraudulently obtained the debt from Carter Bank. They also alleged the relationship with Carter Bank became more difficult after its leadership changed, leading to the decision to sell the debt.

Ruby said in a court filing that White Sulphur Springs Holdings contributed to delays by withholding information — including the loan amount — needed to complete the refinancing. He said the Justices made repeated requests for that information, resulting in five days of delay, and that representatives for White Sulphur Springs Holdings declined a phone call to discuss the closing. Ruby said that conduct suggests the company’s interest is in control of the resort rather than resolution of the debt.

White Sulphur Springs Holdings had previously negotiated with the Justices for 50% ownership of the resort in exchange for refinancing the loan before those talks broke down.

The Justice family purchased The Greenbrier in May 2009 out of bankruptcy.