West Virginia Governor Jim Justice said in a lawsuit that he had a “remarkably productive” relationship with Carter Bancorp founder Worth Harris Carter, but that after Carter’s death, top Virginia bank officials “displayed tremendous hostility.” “
Luke Charrett/Bloomberg
West Virginia Governor Jim Justice has sued Carter Bancorp for $1 billion, claiming the Martinsville, Virginia-based company illegally blocked it from refinancing hundreds of millions of dollars of loans.
The allegations were contained in a 36-page complaint filed Friday in the U.S. District Court for the Southern District of West Virginia. Justice, a Republican, announced on April 27 that he would seek the U.S. Senate seat currently held by Senator Joe Manchin. Manchin, a Democrat, recently announced he would not seek re-election.
Justice, who took office in 2016, has extensive stakes in agriculture, coal and hospitality, including the 710-room Greenbrier resort in White Sulfur Springs, West Virginia.
According to Justice’s complaint, she had a “remarkably productive” relationship with Worth Harris Carter, the late founder of Carter Bancorp. However, almost immediately After Carter’s death in April 2017Justice’s relations with the bank deteriorated.
The complaint states that in place of a close bond “based on mutual respect and honor”, Carter’s successors as CEO, Litz Van Dyke, and Executive Vice President Phyllis Karavatakis “displayed blatant hostility toward the justice companies and the justices individually.” of.”
Carter Bancorp said in a securities filing that the allegations in the lawsuit filed by West Virginia Gov. Jim Justice are “false and misleading.”
At the core of the complaint is a claim that Carter Bancorp, with $4.5 billion in assets, made a technical default on a $1.9 million payment to Justice for a coal-related loan, then used it to accelerate the maturity dates of another $268 million of loans. Did for. -Collateral loan. Justice claims that Carter Bancorp violated the Bank Holding Company Act of 1956 by prohibiting it from refinancing its loans with another lender, “effectively gaining control over Justice’s businesses and for the plaintiffs Making it impossible to pay your debts in full.”
A Carter Bancorp spokesperson declined to comment Wednesday, citing a policy against commenting on customer relationships or pending litigation. However, the company said in a filing with the Securities and Exchange Commission on Tuesday that the allegations made in Justice’s lawsuit are “false and misleading.”
“They largely repeat the factual allegations contained in the lawsuit filed against Carter Bank by the Justice parties in the same court in May 2021. That lawsuit was dismissed in September, 2021,” Carter said.
According to Justice’s complaint, their relationship with Carter Bancorp began in 2001 with a $4.5 million real estate loan. The bank’s loan to Justice extended over the next 16 years, reaching $775 million in late 2016.
Justice said the relationship was worth a total of $740 million at the time of Worth Harris Carter’s death. In a May 2021 complaint against the bank, Justice revealed that the relationship had shrunk to $368 million. At the time, Justice said he and his companies had paid interest and fees totaling $238.5 million.
In a November 7 research report, Janney Montgomery Scott analyst Freddie Strickland estimated the current size of the Justice relationship at $302 million, which Carter classified as non-performing. As a result, the company reported the ratio of non-performing loans to total loans at 9.04% as on September 30. Excluding the Justice relationship, Carter’s credit quality “is solid and has improved through year-end 2022, with only critical and classified loans making up 0.35% of total loans as of Sept. 30,” Strickland wrote.
Carter is pursuing his lawsuit against Justice in Virginia state courts. Both sides appeared to reach an agreement in September 2021. But the problem resurfaced in April 2023, when Justice Companies issued a press release announcing that “there is a significant loan dispute with Carter Bank and Trust.” In the press release, Jay Justice, son of Jim Justice and chairman and CEO of Justice Companies, claimed that Carter blocked a refinancing play that would have provided an immediate cash payment of $250 million.
In its SEC filing on Tuesday, Carter Bank claimed that Justice Companies failed to comply with the terms of its loan agreements. “Like all customers, Justice Entities have an obligation to repay all amounts due in full and on time as agreed to in the various loan documents governing their loans with Carter Bank. Justice Entities did not meet that obligation, ” the bank wrote.
Source: www.americanbanker.com
