Photo by Steven Allen Adams The Trellis Lobby at the historic Greenbrier Resort in White Sulphur Springs.

CHARLESTON – A federal case to appoint a receivership for the historic Greenbrier Resort might be delayed for the moment, but attorneys for the Greenbrier’s loan holder are pushing back on a related state lawsuit brought by the family of U.S. Sen. Jim Justice.

Attorneys for Texas-based TRT Holdings Inc. filed a response Friday in Greenbrier County Circuit Court in opposition to a motion by the Justice family seeking a preliminary injunction against the parent company of Omni Hotels and Resorts and Virginia-based Carter Bank and Trust.

That motion was filed in a circuit court case begun in April following a federal lawsuit by White Sulphur Springs Holdings LLC (WSSH), created by TRT Holdings following its purchase of Carter Bank’s Greenbrier loan debt at the end of March. The Justice family alleges that Carter Bank and TRT Holdings engaged in a deceptive conspiracy to orchestrate a hostile takeover of the Greenbrier by unlawfully selling and acquiring the hotel’s debt. TRT Holdings has denied these claims.

Attorneys for TRT Holdings argue that the court lacks the authority and jurisdiction to halt their collection efforts, especially since a separate federal action is already underway to appoint a receiver for the property.

The defense also contends that the claims made by the Justice family are unsubstantiated, noting the financial hardship the family has faced regarding The Greenbrier is self-inflicted due to repeated loan defaults.

“Without the ability to enforce its judgment-creditor rights and seek the immediate appointment of a receiver, the value of WSSH’s collateral will continue to diminish,” wrote TRT Holdings attorney Seth P. Hayes. “The Greenbrier and its revenue are already being lost, concealed, injured, diminished in value, and squandered.

The judgments now owed to WSSH by the Justice family come to more than $370 million according to the 14th amended and restated forbearance agreement. Hayes said the Justice family is now in default after failing to make their April interest payment and pay outstanding real estate taxes, with the April 15 maturity date now expired.

“Plaintiffs have not satisfied their debts to WSSH and Plaintiffs must pay, indefeasibly and in full, the Judgments and all other obligations they owe to WSSH. But Plaintiffs cannot, or will not, pay,” Hayes wrote. “WSSH brought its first-filed action to enforce its creditor rights through the appointment of a receiver to protect its collateral, The Greenbrier.”

Hayes argued that the Greenbrier County Circuit Court does not have the jurisdiction to issue an injunction against WSSH and TRT Holdings, and that previous loan agreements signed by the Justice family include requirements that certain lawsuits be filed in New York; Martinsville, Va.; or the U.S. District Court for the Western District of Virginia.

“Plaintiffs have a track record of making improper, collateral attacks on final, preclusive judgments,” Hayes wrote. “The Virginia Judgments are final, preclusive, and entitled to enforcement. Plaintiffs’ Motion for a Preliminary Injunction represents yet another impermissible collateral attack on the Judgments, and Plaintiffs cannot show a likelihood of success on the merits of their claims.”

Meanwhile, U.S. District Judge Frank W. Volk – in a memorandum opinion and order issued Saturday – agreed to grant a request by attorneys for the Justices, relieving parties in the federal lawsuit from previous deadlines while the family works to close on a deal with a new loan provider to pay off the WSSH debt.

According to a redacted term sheet provided to Volk last week, New York-based Kennedy Lewis Investment Management could provide the Justice family up to $500 million to refinance existing debt, secured by the Greenbrier Resort and connected properties as well as land and timber assets owned by the Justice family. The proposed deal also involves loan guarantees secured by U.S. Sen. Justice and other members of the Justice family.

Volk set a July 16 date for the Justice Family and Kennedy Lewis Investment Management to close on the loan agreement, with status report deadlines of June 14 and July 3. If there is no deal by July 16 or the transaction falls through before then, the federal case would continue.

“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,” Volk wrote. “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.”

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 resort’s operations.

“… Receivership is an exceptionally serious matter. It is the corporate equivalent of martial law, wherein a court-appointed outsider takes command of the company’s economic lifeblood under judicial authority,” Volk wrote. “This is why the potential for prejudice to the receivership opponent is often of the cataclysmic variety.”

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