Yet another soap opera is developing. Yellowstone Club, near Big Sky, Montana, which during the good times used to be the ultra-exclusive and ultra-expensive escape of a select few such as Bill Gates, Dan Quayle, Bob Greenhill, Steven Burke and Peter Chernin, is becoming the hotbed for one of the most acrimonious luxury resort legal battles in modern history. Its secluded location, away from traditional winter resorts, such as Aspen and Telluride, meant it would draw in the rich crowd with such requirements as a $320,000 initiation fee, $5 to $25 million property purchases and $18,000 in annual dues. The club had opened in 1997 and its centerpiece used to be the still unfinished $100 million Warren Miller Lodge, after the ski-film maker, who is an honorary board member. A little more on the curious perks for guests: Like the club itself, the lodge is chock-a-block with underutilized amenities, from a caviar bar (where a single serving can cost up to $350) to reading nooks with overstuffed leather couches next to plates of untouched fresh-baked cookies. The empty restrooms are marble-lined and stocked with L'Occitane products. Up an imposing curved staircase and down a long wood-paneled hallway - replete with big-game taxidermy - is the lodge's main dining room. On a December afternoon, as Blixseth gives a guided tour, the bright Montana sun streams through the room's huge windows, which look out onto the slopes of Pioneer Mountain, where the vertical drop is 2,700 feet. A high-speed Doppelmayr covered chairlift continually deposits its empty payloads at the peak. Below the lift an occasional skier carves through the powder on trails named Learjet Glades, Sunset Boulevard, and Ebitda.
When the economy went sour, things promptly worsened for the resort, and Yellowstone filed for bankruptcy in November 2008 after it failed to secure funding for an expansion as well as some other curious improprieties by its owner Tim Blixseth, and his estranged wife Edra Blixseth.
In a disclosure statement filed in bankruptcy court, Yellowstone notes that most of the $375 million in cash that Credit Suisse had provided in the form of secured financing in 2005, had been diverted directly to Tim, who channeled $208 million of this money in the form of a dividend to himself.
“The overwhelming evidence is that Credit Suisse and Mr. Blixseth knew and intended at the time that they were essentially converting an equity interest that was junior in priority into an alleged secured claim that is now senior in priority,” court documents filed by the debtor on Feb. 13 said.
The plan further warns of numerous potential lawsuits related to the CS loan, implying that Blixseth, who once was a huge fan of Gulfstream IVs and owned various multi-million dollar homes all over the country, may be stuck in litigation purgatory for a long time. And litigation will come not only from creditors who will claim he illegally diverted secured funding, but also from the IRS, and also his wife, Edra, who curiously ended up owning Tim's 50% stake of the club as part of their divorce settlement. Edra, herself may also be in hot water, as Western Capital, which is suing Yellowstone for a $13 million loan, sought a warrant for her arrest on Wednesday after she failed to appear at a district court hearing.
In the meantime, private equity group CrossHarbor Capital, is hoping to take advantage of the smoke from all the scandals related to the property and acquire it at a low ball bid. The asset manager loaned Yellowstone a $22.6 million DIP in exchange for being a stalking horse bidder in the ensuing 363 auction for the property. Lender Credit Suisse, which figured out the low-ball bidding ploy, has sought and obtained the appointment of an examiner who will investigate conflilcts of interest between CrossHarbor, Edra Blixseth and others. CS lawyers are arguing the parties are working to try to hand the company to CrossHarbor for an extremely low price at the expense of creditors. In response, Yellowstone recently hired C.B. Richard Ellis to market the resort to a wider investor audience.
Any funds out there who wish to position themselves for that one moment 20 years down when the economy picks up to where people can afford Yellowstone's exorbitant fees, should swing by bankruptcy court on the day of the auction and keep outbidding CrossHarbor at every turn. In the meantime the lack-of-love pentagram between Tim, Edra, Credit Suisse, CrossHarbor, the IRS, and likely many more as yet unknown litigants should provide hours of entertainment to former millionaires who now live in the slums.
Bookmark this post with:
1 comments:
The Blixseths may be divorced and bankrupt, but they are still living in luxury in Rancho Mirage, CA.
Post a Comment