Yellowstone Club, the millionaires-only ski resort that emerged from bankruptcy only 10 months ago are embroiled in a dispute with its creditors who are claiming $286 million from its founder and former owner, Tim Blixseth. The creditors claim that Blixseth stole millions of dollars from the club to purchase luxury real estate. On the other hand, Blixseth claims that the club was victimized by his ex-wife Edra, new owner Sam Byrne and officials of finance company, Credit Suisse. As a result, Sr. US bankruptcy judge John Peterson issued an order March 12 for all parties to settle their differences within 3 days starting May 5 in Butte.
In 2005, Credit Suisse had arranged for a $375 million loan to Blixseth but has since then been trying to have nothing to do with the legal claims by the creditors. However, Judge Peterson’s order involves Credit Suisse also. Nevertheless, as Judge Peterson is merely a mediator and not the actual judge presiding over the case, he has no authority to compel Credit Suisse to come to the negotiating table. Credit Suisse themselves have not confirmed whether they will be attending the talks in May.
The presiding judge is US Bankruptcy judge Ralph Kirscher, who is overseeing over many of Yellowstone’s cases. All parties involved in the disputed $286 million claim have submitted their final legal briefs to Judge Kirscher.
Records show that within days of handing over control of the exclusive club to his ex-wife in their 2008 divorce settlement, Blixseth began transferring hundreds of millions of dollars worth of assets to a trust in Las Vegas, Desert Ranch LLLP. Blixseth acquired most of those luxury real estate properties through the $375 loan he obtained through Credit Suisse. As such, the attorney for the creditors, Charles Hingle accused Blixseth of performing every step he took with complete intentionality knowing full well he was removing assets from Yellowstone to prevent them from being seized by creditors.
Judge Kirscher subsequently issued a restraining order preventing Blixseth from removing any assets from the Desert Ranch trust.
On the other hand, Blixseth’s lawyers have been making their case against Credit Suisse whom they deem as “the party who chiefly created this mess in the first place.” Judge Kirscher had already penalized Credit Suisse for making a risky loan to Yellowstone which it knew could not be repaid. This ruling moved Credit Suisse down the order in the repayment queue behind other creditors.