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The road has been a rocky one for the Yellowstone Club. File photo by David Nolt.

Yellowstone Club In Desperate Straits, Court Papers Say

The Yellowstone Club near Bozeman teeters on the brink of closure and lacks the cash to make payroll for 521 employees for the next three weeks, if a Montana bankruptcy judge doesn’t allow the company to take on another $4.5 million in debt and spend its cash collateral, according to a plea filed in the resort’s bankruptcy case.

The uber-exclusive, 13,600-acre Yellowstone Club filed for Chapter 11 bankruptcy protection late Monday, citing a total of $344 million in debt, mostly to international bank Credit Suisse, and about $1.1 billion in assets, court filings say.

A special request filed alongside the initial bankruptcy papers asked U.S. Bankruptcy Judge Ralph B. Kirscher to OK an immediate hearing in the case to decide whether the club could use its cash collateral and to take out the loan.

The filing says the club’s operations “have an immediate need to use cash collateral, without which they would be unable to operate their businesses at this critical time…. Moreover… cash collateral alone is insufficient to afford the debtors the ability to manage their businesses and generate revenues.”

Those ongoing obligations include payroll and contractors among others, the filing says.

In an emailed letter to club members sent Monday, Edra Blixseth wrote that she had been working “feverishly to remedy Yellowstone Club’s capital and liquidity situation” with “a roughly $100 million preferred equity infusion” into the club. The financing plans fell through, though, as did efforts to sell Yellowstone Club World assets in France and Scotland.

Blixseth wrote that the club’s financial troubles had damaged staff morale and undercut the willingness of vendors, such as food service companies, to supply the club. She told members the club plans to continue to work on a recapitalization plan with Credit Suisse.

Chapter 11 bankruptcy allows a business to remain open while it reorganizes its debt.

In an order made Tuesday morning, Judge Kirscher said he would hear the case on Wednesday. Specifically, Blixseth has asked that Kirscher allow the club to use as collateral for the new loan the club’s assets, which have already been obligated to lender Credit Suisse, among others, and are already encumbered by liens from construction companies who have not been paid by the club.

Over the past year and more, the Yellowstone Club, the world’s only private skiing and golf community, has been in and out of the news, thanks to the public divorce of owners Tim and Edra Blixseth as well as legal battles between owners and Tim Blixseth.

Also, earlier this year the club missed loan payments to creditor Credit Suisse and has been on the verge of seeking bankruptcy protection. This summer, Edra won control of the club and vowed to get its overdue construction back on track and to keep its business out of the public eye.

Edra Blixseth and the Yellowstone Club tried to take a step in that direction in September by entering a long-term contract with Discovery Land Co. of Scottsdale, Arizona. The company, which operates 15 other private communities around the world, took over the management of the club and planned to expand the residential community, infrastructure and amenities.

“In the short term, we need cash to take care of members and infrastructure needs and supplies,” said club spokesman Bill Keegan said. “This bankruptcy will allow the club to get out from under the weight of the debt to allow them to open for the season.”

The period from Thanksgiving to New Year’s is the club’s peak season, accounting for a significant share of its revenues, the filings say.

In a press release Monday, club managers said they plan to open as usual for the winter ski season in early December and conduct normal operations.

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10 comments

  1. Timmy’s Trail of Tears won’t end until he expires. It is the nature of the beast. He has a history, and all of it says this would be the conclusion of this deal, just like most he has profited from in the past.

    Us Oregonians can only say: “Told ya so.”

  2. Maybe Governor Schweitzer will come up with a stimulus package for Yellowstone Club, financial genius that he is, and now so well connected to the hub of world finance and the Cobalt Blue world of Congress. Another billionaire entitlement packaged as a stimulus package. Keep those artisans working.

    The guy pumping my gas today said it was cheering for him to pick up the paper and read that AIG was getting another bunch of billions to shore up their insurance business. Here he is, pumping gas for the minimum wage, going in the hole monthly, and the billionaires are getting the money taken out of his taxes ostensibly to pay social security some day in the future. He knows he is saving the billionaires, him and millions like him, and that is just not making his heart go pitter-patter, not making him feel warm and fuzzy all over. And their not being able to avail themselves to their golden parachutes was not making him feel a whole lot better. Not at his salary for what he is doing, compared to what they get paid for really, really, mucking up this country and our treasury. He is barely holding on to a job, and they still are getting paid millions. No justice. There never has been any for Tim to this point, and most likely never will be any. Teflon Timmy. Guilt, shame, honesty, morality, responsibility, all he is able to shed like water off a duck’s back.

    If Lemond got $26 million of the $39 million owed, he should consider himself a hero, and maybe luckier than he was when he survived his Cheney moment. Most creditors are going to get what the little boy who wanted the pony for Christmas found in his stocking—-a sack of horseshit.

  3. YC Employee

    Nice to have a straight forward answer. I am glad to see that there are lights on at the club, glad to see its going to be the best season ever and glad to see everyone is paid and the employees are happy. You work hard and so do the members. Let’s put it this way, you save for a family and so do the members. How would you feel if you spent 7.5m USD on a bunch of lies only to find out you have been screwed? Put it this way, you went inside agave the gas station 50 buck to fill your truck up but went out to the pump and no gas came out. It’s all relative so it’s not a matter of could care less about Greg Lemond getting screwed, you see we the members pay and we thought it was going to the staff. Say all you want about rich FuXXers you want but many just want what they paid for and to insure the club is private. You start off by saying all is fine but end with the ”Missing Pay-Check”‘Glad to see the lifts are running as you say but for how long? You do realize what a Chapter 11 is do you not? How long is 4.45m going to last up there? Let me tell you in simple terms, 4.45m gets you to December 20th unless people put money into this club. Yes the members could invest, but we already did. Maybe the members should take the same attitude as you and say ”Screw it” and close mountain all together by not paying the annual fees. Wouldn’t that be interesting? Then we could all look at this great ”Private Powder” with no skiing and no need for employees all together. After all, every house has its own facilities and no one eats at Warren Miller lodge lately unless you missed this over the last 5 months. 5 cover a day on a good day

    Bear Bait: Great response and Tim has already tried the bail out route, it was calling all the members again to bail him out, however Wayne Primm was the only one to come to his aid.

  4. YCemployee
    I’ve worked with the Club since the begining and have developed many wonderful relationships with many of the employees. My heart goes out to you all! You are all simply trying to make a living while these “Elite Mega Wealthy Crooks” are all trying to screw each other and the good people of Bozeman.
    I’ve been defending the Club and it’s members for years because I felt their families needed the extra security that the Club provided. Well, I guess we are the ones that needed the extra security! You lied to us and robbed us of our hard earned money. I hope you are all embarassed to be part of the “YELLOWSTONE CLUB the worlds only Private Golf and Ski Community”. Now….. members and owners get your act together and make things right for the people of Montana. You have the money, now use it.

  5. Thomas Crown reporting in. So it looks to be a busy season for the Blixseths. Good luck to all

  6. Tim Blixeth had no business running this operation. He was a lumberjack who hit it big – who then cooked up a snake oil scheme among the ultra-wealthy. Well, it was a house of cards – built by both buyers and seller. It’s going down – and fast. There is no way the operating of the place are going to met with a $4.5 million loan. Employees: don’t work unless you have cashed your paychecks at the bank (make sure the bank is still open!). Believe me – I’ve seen this before – in the oil industry, when companies went bust. Assurances, assurances, assurances….oops…money went away two weeks ago…

  7. It’s too bad that members and employees would have any poor feelings toward one another when the vast majority of members and virtually all employees did nothing to architect this failure. Everyone’s been taken by Tim. As a member I have a lot of respect for the employees, and they have worked under uncertain circumstances at best. They want reasonably steady employment and to be able to know their check won’t bounce; members want to use the services they bought into and, through real estate and dues, paid for. Nothing wrong with either of those things. And if there had not been an owner who airlifted $200 million straight out of the company coffers, they would both still be happening.

  8. Its sad to think that worthy people will no longer be having so many of their own gated skiing communities. They may soon have to take up cross country…

  9. Editor’s Note: In accordance with our comment policy, this thread has been edited to remove a number of comments that contain personal attacks. We invite everyone who has information about the situation and the individuals involved to get in touch with me (jonathan@newwest.net) or with reporter Robert Struckman, we can both be reached at 406-829-1725.

  10. As an outsider here it seems that ALL parties have some responsibility. Wasn’t there any greed involved by tradespeople who sought higher pay at the club? I recall a time when employees were hard to find in Bozeman because the club was such a potentially lucrative place to work. With reward comes risk. Buyers were looking for exclusivity and profit. Sounds like these Blixseths lost their minds, too. Everything is a confidence game. Everbody sure wants to depict themselves as the victim.