Jobs cut as Greenbrier sacrifices casino to secure financing

CHARLESTON - The family of U.S. Sen. Jim Justice told a federal judge that in order to secure its deal with a New York financier to satisfy debts owed to a Texas-based hotel company, it will shutter the Greenbrier's popular casino temporarily as the deal awaits approval from state gaming regulators.

Attorneys for the Justice family provided an update Thursday to U.S. District Judge Frank W. Volk as the family works to finalize a deal with New York-based Kennedy Lewis Investment Management for up to $500 million to pay off major creditors and cover the costs of capital improvements at the historic Greenbrier Resort in White Sulphur Springs.

The loan, characterized by some as more of a partnership, would be secured by the resort and connected properties and land and timber assets owned by the Justice family, and guaranteed by the senator and other family members. The Justices would be required to create a new holding company and provide KLIM first-lien collateral on all significant resort properties.

Justice’s attorneys said that deal is expected to close today provided that White Sulphur Springs Holdings - a company set up by Texas-based TRT Holdings that now holds the Greenbrier's loan debt - agrees to a closing.

But in order to finalize the deal with KLIM, the Justice family has to shut down its Greenbrier Casino Club, which first opened 16 years ago. The Justice family and KLIM are awaiting approval by the West Virginia Lottery Commission of the transfer of the Greenbrier’s casino license to a new holding company being created to manage the Greenbrier’s operations moving forward.

"Due to the significant costs associated with any further delay in closing the transaction described below, the Greenbrier has reluctantly decided that it will shut down its casino in order to close the transaction," wrote Justice family attorneys Steve Ruby and H. Rodgin Cohen. "This will result in the layoff of approximately 90 casino employees, which Defendants deeply regret, as well as a loss of revenue to the State, which is also regrettable. Defendants have diligently provided information to the Lottery for more than two months and have promptly responded to all information requests from the Lottery."

Ruby and Cohen told Volk that any further delay in finalizing an agreement between the two companies would be costly, with the amount of interest charges on the loan held by WSSH growing by $145,000 per day.

"Further delay will cost Defendants hundreds of thousands of dollars in additional professional fees," the attorneys wrote. "Nonetheless, the Lottery has not yet confirmed when it will consider the Greenbrier's approval request. Faced with no other practical options to close the transaction on a timely basis and avoid even higher costs of delay, the Greenbrier therefore intends to close the casino and conclude the transaction on Friday."

The Justice family owes more than $387 million to WSSH after TRT Holdings purchased the Greenbrier's remaining loan debt from Virginia-based Carter Bank and Trust in March. According to court documents, discussions between WSSH and the Justice family on a partnership for the Greenbrier broke down, with WSSH filing a lawsuit against the family in the U.S. District Court for the Southern District of West Virginia when the loan went into default in April.

Attorneys for WSSH are asking Volk to appoint a receiver for the Greenbrier and miscellaneous properties and issue a permanent injunction against the Justice family to prevent further interference in The Greenbrier’s operations.

In their filing Thursday, Ruby and Cohen accused WSSH/TRT Holdings of attempting to sabotage the closing through last-minute legal demands and "eleventh-hour" obstructive tactics, including what they call unorthodox demands for an in-person closing and significant last-minute revisions to legal agreements.

"Notably, Defendants' ability to close on Friday depends on cooperation from Plaintiff, which must provide a payoff letter and associated lien releases as part of the closing process," Ruby and Cohen wrote.

"Defendants now must review and respond to these eleventh-hour changes," the attorneys continued. "Defendants remain gravely concerned that Plaintiff is attempting to obstruct closing in an effort to derail the refinancing. Defendants will work through these most recent impediments and remain on pace for a Friday closing, but Defendants may well need to approach the Court for emergency relief if more obstacles are interposed."

The Greenbrier and the Justice family are also facing new financial pressures. WV MetroNews reported that the IRS filed two liens Monday totaling more than $8 million on the Greenbrier over unpaid payroll withholding taxes, as well as a nearly $830,000 lien against the Greenbrier Clinic.

Steven Allen Adams can be reached at sadams@newsandsentinel.com.