Justice Coal Company Challenges Helicopter Seizure by Entity Linked to Russian Oligarch
Embark on a legal journey with Justice Coal Company as it confronts the helicopter seizure orchestrated by an entity associated with a Russian oligarch. Explore the challenges faced by the company in navigating this intricate legal landscape
A business affiliated with Governor Jim Justice and his family have raised objections against the confiscation of a helicopter Seizure as a means to settle a debt owed to a Russian mining Justice Coal company. They argue that priority for the proceeds from the helicopter should be given to other lenders who hold higher positions in the financial hierarchy.
In the realm of politics, Justice stands as a prominent figure within the Republican party and a top contender for a seat in the U.S. Senate. He initially entered the political arena by securing the position of governor, touting his background as a businessperson. For a considerable stretch of time, Justice held the distinction of being West Virginia’s sole billionaire, but Forbes revised this status following contentious financial disputes in 2021. Justice’s most recent financial disclosure, submitted in conjunction with his Senate candidacy, reveals a substantial amount of debt, totaling in the millions of dollars.
In the unfolding debt saga, Caroleng, a holding Justice Coal company and parent to the Russian mining giant Mechel, asserts that the seizure of Bluestone Resources’ Bell 2009 helicopter Seizure is imperative to settle a segment of their sizable debt, estimated to be around $10 million. Notably, Caroleng is based in the British Virgin Islands.
“If a BVI Justice Coal company controlled by a Russian oligarch is allowed to seize the helicopter Seizure, Bluestone’s secured creditors — and therefore Bluestone, as well — will be irreparably harmed,” wrote lawyers for Bluestone Resources in a Friday federal court filing first reported by The Charleston Gazette-Mail.
Bluestone Resources, a subsidiary of Justice’s conglomerate involved in coal production, has asserted in a formal federal submission that it has additional outstanding debts to secured creditors. These debts primarily stem from loans, totaling approximately $800 million, that were initially extended by the now-defunct international financial institution, Greensill Capital. Another lender, 1st Source Bank, is reported to hold secured interests amounting to approximately $5 million.
In 2021, Greensill faced a significant collapse, resulting in a substantial financial burden for Credit Suisse, a financial institution of even greater magnitude. In a subsequent development this year, UBS Group AG absorbed Credit Suisse. The liability stemming from the Greensill debacle has shifted from one entity to another, with David Justice, the man behind Greensill, personally responsible for a staggering $700 million in Greensill loans. In 2022, Credit Suisse unveiled a tentative plan to address this debt issue, which included the potential sale of Bluestone coal assets. The current status of this plan remains unclear.
In the event of the helicopter’s sale, attorneys representing Bluestone argue that the funds should be rightfully directed towards the secured lenders. The legal representatives of Bluestone have formally requested a halt to a court directive issued last week, which sanctioned the confiscation of the helicopter.
“These creditors’ rights and interests in the helicopter Seizure are superior to Caroleng’s judgment lien, and there is no realistic prospect that the secured creditors could successfully pursue Caroleng in the BVI or Mechel in Russia after the helicopter is liquidated,” wrote lawyers for Bluestone.
“Because the helicopter is subject to security interests held by two Bluestone creditors, moreover, Bluestone is already contractually prohibited from disposing of it. Any proceeds from the liquidation of the helicopter, moreover, would properly flow to the secured creditors, not to Caroleng.”
In an ongoing dispute, a protracted business arrangement has taken an unexpected turn. Back in May 2009, Justice sold the family’s coal assets to Mechel for a substantial sum of $436 million in cash and 83.3 million preferred shares of Mechel stock. However, in a surprising move, Justice reacquired Bluestone in 2015 for a mere $5 million.
The latest legal document filed by Bluestone brings to attention Mechel’s owner, labeling them as an Russian oligarch. This term typically denotes a power structure where authority is concentrated among a select few individuals. The filing states, “In 2015, Bluestone carried out a significant acquisition of assets from Caroleng, a holding company based in the British Virgin Islands, affiliated with Mechel OAO, the Russian metals and mining conglomerate under the control of Russian oligarch Igor Zyuzin.”
In a recent development, the mining operations, once closed under Mechel’s management, have been reopened by Justice. This move came as part of a deal to repurchase the Bluestone properties, which also included an agreement to pay Caroleng $3 per ton in royalty payments for the mined coal, in addition to specified portions of future sales.
Caroleng, in their court filings, alleged that Bluestone had withheld the royalty payments owed to them. Bluestone, on the other hand, argued that they had withheld funds as “setoffs” against previously overpaid amounts to Caroling. Caroling countered this by pointing out a clause in their 2015 sale agreement, which they claimed prevented Bluestone from retaining “setoff” payments.
The case was taken to arbitration in Paris, France, in October 2019, during Justice’s initial term as governor. A three-person panel from the International Chamber of Commerce presided over the proceedings and ultimately awarded $8.4 million, along with pre-award interest of $1.7 million, after determining that Bluestone had “materially breached” multiple aspects of the agreement with Mechel.
In a recent filing, Bluestone has indicated that they are actively appealing the international arbitration ruling. Meanwhile, Caroleng has pursued legal action to seize Bluestone assets, including a helicopter.
A writ of execution, filed in federal court last week, instructs U.S. marshals to confiscate the helicopter situated at the Roanoke-Blacksburg Regional Airport in Virginia, “or elsewhere in this district, including all logs and records, all accessories, attachments, parts, repairs, additions, accessories, substitutions, exchanges related to the helicopter.” Additionally, it authorizes the United States Marshal and/or Judgment Creditor to forcibly enter a secured space, if required, to seize the judgment debtor’s property in the enforcement of this writ.
Governor Justice addressed the financial liabilities of his family-owned companies during a recent state news briefing, in response to the mandatory financial disclosure revealing significant personal debts. He assured that his family is committed to meeting these financial obligations.
“You’ll see a family that has worked really, really, really hard — a family that, at one time, if you’re really fair and you’ll step back from it, you’ll say ‘Well, when things were really tough, why didn’t they take bankruptcy like every coal company almost in the land that was in trouble that wrote off hundreds and hundreds of millions, if not billions, of dollars.’ And we didn’t do it,” he said.
“There’s no big pots of gold sitting around. Absolutely, at the end of the day, you can see that. And from that you can see a family that sometimes are a little late on a bill and everything, but we pay them, don’t we?
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