Jim Justice outside The Greenbrier
BECKLEY – A federal judge has granted a short pause in The Greenbrier legal saga to see if a $500 million financing proposal for the Justice family comes to fruition.
U.S. District Judge Frank Volk issued a memorandum opinion and order May 30 granting the delay. In the six-page filing, Volk says “comparative prejudice weighs in favor of granting the brief delay sought.”
Sen. Jim Justice and his family businesses had requested the pause in case deadlines to allow them an opportunity to close new financing that could fully repay the loans and render the case moot. Volk did warn that no further extensions are likely if the financing deal does not close promptly.
Last week, Volk had directed the Greenbrier-related defendants to file a redacted version of the term sheet showing up to $500 million in new financing. The order comes in a lawsuit brought by White Sulphur Springs Holdings, a Texas company affiliated with Omni Hotels & Resorts, against Justice, wife Cathy Justice, son James C. Justice and a slate of Greenbrier-related entities over hundreds of millions of dollars in alleged debt tied to the resort.
That term sheet was filed in court May 27, and attorneys for the Justice family and businesses also offered to let Volk see the unredacted version of the term sheet privately.
Kennedy Lewis Investment Management, which is based in New York, is the lender, according to the redacted term sheet. It describes itself as “an opportunistic credit manager focusing on event-driven situations in which a catalyst may unlock investment value.”
In his order, Volk granted “as moulded” the defendants’ motion to continue briefing deadlines and upcoming hearings. The order relieves both sides from existing deadlines and pushes back a June 1 prehearing conference as well as a June 8 evidentiary hearing in the receivership case.
The proposed refinancing, described in a redacted term sheet filed on the public docket, is expected to close in late June.
WSSH, the Texas‑based entity that acquired the Greenbrier debt and is seeking appointment of a receiver, opposed the continuance, calling the financing “too speculative” and emphasizing that the term sheet is non‑binding. The company argued the Justice entities’ obligations extend beyond principal to mounting interest, fees and expenses, and accused the defendants of a history of violating a forbearance agreement and using non‑binding letters of intent to stall litigation.
Volk relied on a “good cause” standard for modifying scheduling orders. He concluded the defendants acted diligently by promptly seeking an administrative suspension once the financing emerged and found that “comparative prejudice” favored a short delay, noting WSSH itself recently obtained a continuance to amend its complaint.
Volk described receivership as the “corporate equivalent of martial law,” quoting a 1944 Tenth Circuit decision warning that the power to appoint a receiver “should be exerted sparingly” because misuse can cause “great hardship.”
“Receivership is an exceptionally serious matter,” Volk wrote. “It is the corporate equivalent of martial law, wherein a court-appointed outsider takes command of the company’s economic lifeblood under judicial authority.
“This is why the potential for prejudice to the receivership opponent is often of the cataclysmic variety. …
“In the face of essentially divesting the defendants of their highly prized, historic and long-held assets, a final attempt to avoid that strong medicine tips the balance in favor of allowing them a brief period to consummate the subject transaction. If defendants seek further extensions for either (1) more extended negotiations with, or financing due diligence by, the financing partner, or (2) to allow additional forays with other lenders, the balance of prejudice will likely shift rather abruptly.”
Volk’s order requires the defendants to file status reports on June 14 and July 3, updating the court on progress toward closing, with the expectation that the transaction will be completed on or before July 16. If the deal collapses at any point, the defendants must notify the court within 24 hours, and the parties are to be ready to move immediately to hearings and other case events under a revised schedule.
