Deceptive Yellowstone Club Founder Responsible for Some Debt
Posted on Sep 24, 2010 2:15pm PDT
The bankruptcy of Montana's private Yellowstone Club is being blamed on its founder, Tim Blixseth, and his fraudulent deals, per a federal judge and reported Google News.
U.S. Bankruptcy Judge Ralph Kirscher is not holding Blixseth solely responsible for the ski club's entire $200 million in claims. Attorneys claim that Blixseth will only be liable for $20 million to $65 million of the club's debt.
Real estate mogul Blixseth, in a 135-page ruling prepared by Kirscher, had established a pattern of "self-dealing" and "deception" that allowed him to gain money from the Yellowstone Club.
Kirscher also names Credit Suisse for some of the blame in the bankruptcy. Blixseth, with Credit Suisse's knowledge, received a loan in 2005 for the club's use. Blixseth, however, planned on using most of the money for himself to purchase many estates, planes and to increase his own bank accounts.
In his report, Kirscher contends, "Blixseth and Credit Suisse have done a lot of finger pointing in this case, but in the end their conduct prompted (the club's) bankruptcies."
The elite Yellowstone Club, built in the Madison Mountains by Blixseth and his wife Edra, required potential members to make multi-million dollar investments to join.
The club faced its bankruptcy after the Blixseths divorced and Edra held the keys to the club. She was unable to repay the $375 million loan that Tim had taken out under the club's name and declared bankruptcy in November of 2008.
Kirscher detailed several fraudulent transfers made by Blixseth in his ruling.
He had rejected Blixseth's claim that the club was fine when he left it, and that he was a victim of a conspiracy between Edra and the club's new owners, CrossHarbor Capital Partners in Boston.
Kirscher continues in his report to state that, "Blixseth testified at trial that he wanted to see the creditors of the Yellowstone Club paid and that the buck stops with him. The Court agrees."
Blixseth, however, was not held responsible by Kirscher for the outstanding amount left on the 2005 loan.
A Utah attorney once involved in the case, Thomas Beckett, said that the decision was much more favorable than expected for Blixseth, "If the party who is suing you for $225 million is suddenly told they can't, on some level it's a good day."
As the loan was issued on a nonrecourse basis, Credit Suisse and its investors have limited legal options. Blixseth, as an individual, cannot be held responsible.
The only positive solution for Credit Suisse is if Marc Kirschner, the trustee for the creditors, could win an appeal in bankruptcy court.
The trustee has been seeking a judgment of $286 million against Blixseth. There is a belief that Blixseth has money hidden in a Nevada holding company just to protect it from the hands of his creditors.
Charles Hingle, the attorney for the trustee, is currently reviewing the order.
If you are facing a bankruptcy, contact a Bankruptcy Attorney to provide the help you need to have everything in order.