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Exclusive Yellowstone Club sale approved for US$115M
Source: Agencies |
June 3, 2009, Wednesday
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A bankruptcy judge approved a sale of the Yellowstone Club for the bargain of US$115 million Tuesday, letting the exclusive Montana resort emerge from bankruptcy that developed after its owners diverted hundreds of millions of dollars for their own use.
Boston-based CrossHarbor Capital Partners is buying the club for less than a quarter of the US$470 million it offered last year - underscoring the meteoric fall of one of the world's most exclusive resorts.
At the height of the luxury real estate boom, the 13,600-acre (5,500-hectare) club in Montana's Big Sky area north of Yellowstone National Park attracted such high-profile names as Bill Gates, Dan Quayle and cycling star Greg LeMond.
To join, more than 300 members bought multimillion dollar mountain properties and submitted deposits of at least US$250,000.
Sales have stagnated with the collapse in the real estate market and negative publicity surrounding the acrimonious divorce of club founders Tim and Edra Blixseth.
More than 500 memberships are unsold and the resort's centerpiece lodge is unfinished.
Edra Blixseth, who took sole control of the enterprise last August, predicted Tuesday that the club's sale will allow it to "get past the lean times of the last couple of years."
"It's not necessarily a win-win when you think of me," said Blixseth, who has filed for personal bankruptcy protection and will remain deeply in debt even after the sale is complete. "But it's a positive outcome for the Yellowstone Club."
Details of the club's sale were approved in an order signed Tuesday by U.S Bankruptcy Judge Ralph Kirscher in Butte.
Tim Blixseth, who no longer plays an active role at the club, had attempted to scuttle the deal in court, but Kirscher denied his efforts. Responding to an e-mail from The Associated Press, he said he wished "nothing but good luck" for the club and declined to comment on its pending sale.
The ruling will allow the club to shake off most of its US$400 million in debts.
CrossHarbor will pay US$35 million in cash and take on US$80 million in debt to acquire the resort. CrossHarbor managing partner Sam Byrne also committed to spending up to US$75 million in improvements on the club.
Byrne said he expects the acquisition to be completed by June 20 and that local contractors, tradesman and others still owed money would be repaid in full.
Byrne and CrossHarbor already had a significant stake in the success of the club, with investments in its real estate topping US$200 million in recent years.
Yet the legal maneuvering over hundreds of millions of dollars drained from the club's coffers is sure to continue. Much of that money went to airplanes, estates, vehicles and houses bought by the Blixseths.
Investors with Credit Suisse, which had US$308 million still outstanding on a 2005 loan to the club, could receive cash and assets likely worth less than half that amount, including a castle in France valued at US$20 million to US$65 million.
At the outset of the bankruptcy case, Credit Suisse was first in line to get repaid. But because the bulk of the 2005 loan was diverted to Tim and Edra Blixseth with Credit Suisse's knowledge, Kirscher ruled last month that a large portion of the firm's claims would be considered only after other creditors were paid.
Credit Suisse spokesman Duncan King said the firm was "satisfied" with Kirscher's approval of the club's reorganization. He declined to comment on whether the firm's lawyers will seek more money from the Blixseths.
Boston-based CrossHarbor Capital Partners is buying the club for less than a quarter of the US$470 million it offered last year - underscoring the meteoric fall of one of the world's most exclusive resorts.
At the height of the luxury real estate boom, the 13,600-acre (5,500-hectare) club in Montana's Big Sky area north of Yellowstone National Park attracted such high-profile names as Bill Gates, Dan Quayle and cycling star Greg LeMond.
To join, more than 300 members bought multimillion dollar mountain properties and submitted deposits of at least US$250,000.
Sales have stagnated with the collapse in the real estate market and negative publicity surrounding the acrimonious divorce of club founders Tim and Edra Blixseth.
More than 500 memberships are unsold and the resort's centerpiece lodge is unfinished.
Edra Blixseth, who took sole control of the enterprise last August, predicted Tuesday that the club's sale will allow it to "get past the lean times of the last couple of years."
"It's not necessarily a win-win when you think of me," said Blixseth, who has filed for personal bankruptcy protection and will remain deeply in debt even after the sale is complete. "But it's a positive outcome for the Yellowstone Club."
Details of the club's sale were approved in an order signed Tuesday by U.S Bankruptcy Judge Ralph Kirscher in Butte.
Tim Blixseth, who no longer plays an active role at the club, had attempted to scuttle the deal in court, but Kirscher denied his efforts. Responding to an e-mail from The Associated Press, he said he wished "nothing but good luck" for the club and declined to comment on its pending sale.
The ruling will allow the club to shake off most of its US$400 million in debts.
CrossHarbor will pay US$35 million in cash and take on US$80 million in debt to acquire the resort. CrossHarbor managing partner Sam Byrne also committed to spending up to US$75 million in improvements on the club.
Byrne said he expects the acquisition to be completed by June 20 and that local contractors, tradesman and others still owed money would be repaid in full.
Byrne and CrossHarbor already had a significant stake in the success of the club, with investments in its real estate topping US$200 million in recent years.
Yet the legal maneuvering over hundreds of millions of dollars drained from the club's coffers is sure to continue. Much of that money went to airplanes, estates, vehicles and houses bought by the Blixseths.
Investors with Credit Suisse, which had US$308 million still outstanding on a 2005 loan to the club, could receive cash and assets likely worth less than half that amount, including a castle in France valued at US$20 million to US$65 million.
At the outset of the bankruptcy case, Credit Suisse was first in line to get repaid. But because the bulk of the 2005 loan was diverted to Tim and Edra Blixseth with Credit Suisse's knowledge, Kirscher ruled last month that a large portion of the firm's claims would be considered only after other creditors were paid.
Credit Suisse spokesman Duncan King said the firm was "satisfied" with Kirscher's approval of the club's reorganization. He declined to comment on whether the firm's lawyers will seek more money from the Blixseths.
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