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Jay Justice, president and CEO of the companies and the Republican governor’s son, said in a news release Friday that the companies and the bank have been unable to reach an agreement to pay off more than $300 million in loans.
The news release said the companies have a plan in mind but claims Carter Bank & Trust “currently enjoys more than $20 million a year in interest revenue from the Justice businesses” and “refuses to seriously discuss such payoff proposals.”
The news release came a day after the bank filed 11 confessions of judgment seeking the principal and interest on 11 loans to the Justice companies. Included in those filings in Martinsville Circuit Court were promissory notes that declare the loans – which were personally guaranteed by the governor – were supposed to be paid in full by April 15.
A confession of judgment is essentially a legal agreement, sometimes included as a clause in a loan contract, in which a debtor agrees to allow a creditor to obtain judgment against them, without the creditor having to file a lawsuit or appear before a judge, if the debtor defaults on an agreement. Confessions of judgment are not foregone conclusions; they can be defended against and can be set aside by a judge, after which a case would proceed to trial as normal.
Meanwhile, the Justice companies’ news release states the companies have a plan to use more than $250 million in cash from a refinancing opportunity to immediately retire seven of the 11 loans.
The plan would secure the remaining four loans, worth approximately $57 million, with collateral appraised at more than $325 million, and would sell or refinance assets in order to retire those loans within four months, the news release states.
The news release claims Carter Bank & Trust has previously demonstrated, and is currently demonstrating, “obstructive conduct” so it can continue to receive interest revenue from the loans.
Carter Bank & Trust declined to comment Monday.
“It is the policy of Carter Bank & Trust not to comment to the press regarding matters in litigation or matters involving customers of the bank, and therefore the bank respectfully declines to comment in response to your inquiries,” said Brooks Taylor, marketing officer for Carter Bank & Trust.
The Justice companies’ news release states that after the companies developed their current payoff plan, Carter Bank & Trust responded with an “improper court filing” in Martinsville Circuit Court, “apparently in a last-ditch effort to retain a revenue stream that routinely accounts for a large portion of the bank’s revenue.”
“The Justice family will demonstrate that the bank’s new court filing is nothing more than an illegal attempt to stop us from working with other lenders. It is unimaginable that a bank would deny a customer the ability to pay off a loan,” the Justice companies’ news release states.
This is not the first time the Justice family and Carter Bank & Trust have clashed over their loans.
The Justice family has been operating businesses since 1971. Among other interests, it has coal mining, agricultural and hospitality businesses in Virginia, South Carolina and West Virginia. Its holdings include Bluestone Resources Inc., a coal-mining firm, and The Greenbrier, a luxury resort in West Virginia. The James C. Justice Companies, Inc., one of the family’s businesses, is based in Roanoke.
Carter Bank & Trust, founded in 1974, is a community bank with $4.1 billion in assets and locations in Virginia and North Carolina.
In previous court filings, the Justices have described a banking relationship that began in 2001, when the family began working closely with Carter Bank & Trust founder Worth Carter on a $4.5 million real estate loan. That relationship grew to encompass more than $775 million in loans by the end of 2016 before that balance was paid down to current levels.
Carter died in 2017; Gov. Justice delivered a eulogy at his funeral.
Since new bank management took over, the Justices’ news release claims, the bank “has consistently chosen to act in bad faith in their dealings with the bank’s largest borrower.”
In May 2021, the Justices sued Carter Bank & Trust for $421 million, claiming the bank engaged in anticompetitive behavior and breach of contract, among other things. Federal court documents show the two sides agreed to a dismissal of the suit in September 2021.
The Bluefield Daily Telegraph of West Virginia reported in September 2021 that Carter Bank & Trust had also previously filed suit regarding $58 million in loans guaranteed by the governor and his wife.
The newspaper reported at that time that the Justices and the bank had reached a resolution and would dismiss their respective legal actions against each other.
Gov. Justice is expected to announce this week that he will seek the Republican Party nomination in a bid for the U.S. Senate against incumbent Democratic Sen. Joe Manchin, according to a report from Politico.