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.