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Gov. Justice, companies on verge of settlement with major creditor

CHARLESTON — A deal could be imminent between companies owned by Gov. Jim Justice and a major Swiss creditor after the governor was on the hook for nearly $700 million in personal loan guarantees.

Judge Jesse Furman of the U.S. District Court for the Southern District of New York granted a request Tuesday by attorneys representing the defunct finance firm Greensill Capital and Justice-owned Bluestone Resources Inc. for a 45-day extension of a stay issued by the court last September while the two parties negotiate a settlement. Bluestone Resources brought suit against Greensill in March 2021.

“… Discussions between and among various parties in interest to this action as to a potential resolution of this action have substantially progressed since the parties’ last joint extension request, and the requested extension of the stay would allow for those constructive discussions to continue,” the attorneys wrote in their letter to Furman.

The Financial Times reported Sunday that Bluestone Resources and Swiss bank Credit Suisse are close to a settlement over $690 million owed by the mining company to Greensill. Credit Suisse purchased Greensill’s loans to Bluestone prior to Greensill declaring bankruptcy.

According to the article, citing sources with direct knowledge of the negotiations, Bluestone Resources would be required to increase coal production and make cash payments to Credit Suisse. The bank would also have the option to purchase coal mines owned by Bluestone when and if that becomes an option.

“Credit Suisse Asset Management continues to pursue all available avenues for recovery of the funds on behalf of our investors; this remains a priority,” the bank said in a statement to the Financial Times.

Greensill, which specialized in supply-chain finance funds, filed for bankruptcy in March 2021 after losing coverage by credit insurers. Greensill used funding from creditors like Credit Suisse to make a kind of payday loan meant for companies. Greensill and Credit Suisse funded $10 billion in these kinds of loans before Credit Suisse froze all the funds shortly after Greensill filed bankruptcy.

According to a Wall Street Journal report last year, Justice and his wife, Cathy Justice, guaranteed Bluestone’s loans to Greensill in unlimited amounts, while Jay Justice, Bluestone’s CEO while Justice serves as governor, made several limited loan guarantees. The financing, starting in 2018, covered a three-year period.

Bluestone includes Justice’s coal and agricultural holdings. The company primarily produces metallurgical coal used for making steel. Speaking about the matter last year, Justice said the loans were needed to help pay off liabilities and obligations when Bluestone bought back several mines and processing facilities from Russian coal producer OAO Mechel in 2015.

Bluestone is one of about 112 companies owned by Justice, according to his 2022 financial disclosure report with the West Virginia Ethics Commission. Only seven of those companies were placed in blind trusts as of April 30, 2017, shortly after Justice took office. Blind trusts are used by elected officials to place their business holdings in the hands of third parties while they serve to avoid possible conflicts of interest.

Justice turned over control of his private businesses to Jay, who runs the coal and agricultural businesses, and daughter Jill, who runs the Greenbrier Resort. However, Justice has been long accused of still being active in day-to-day management of his companies.

Requests for comment from the attorney representing Bluestone Resources and from Justice were not returned Tuesday.

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