The Yellowstone Club Debacle

A hard-fought struggle for control of the bankrupt Yellowstone Club ended mid-afternoon on Wednesday when a federal bankruptcy judge gave CrossHarbor Capital Partners, a Boston-based hedge fund, the right to loan the club $20 million while it reorganizes its debt - a process that will likely last until the end of April.

U.S. Bankruptcy Judge Ralph B. Kirscher issued his order after weeks of negotiations and three days of court testimony.

The Yellowstone Club filed for bankruptcy protection on Nov. 10, citing debts of more than $360 million, with about $311 million owed to investors assembled by international bank Credit Suisse. 

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Yellowstone Club on the Ropes

A day-long battle over the future of the bankrupt Yellowstone Club played out in U.S. Bankruptcy Court in Butte Tuesday, with lender Credit Suisse desperately trying to maintain control of the property and block a financing deal from Boston-based CrossHarbor Capital. While Judge Ralph B. Kirscher did not issue an immediate ruling, he appeared highly skeptical of Credit Suisse's ability to put forward a viable proposal after an interim funding deal fell apart just before the court hearing.

Credit Suisse, one of the world's largest financial institutions, has been unable to come up with the money for a seven-figure loan package that would enable it to keep control of the club and sell the assets. The bank's plan apparently involved mothballing the club while it sought buyers -- a strategy that many involved in the case believe would be a disaster.

CrossHarbor, for its part, has proposed putting up $20 million to keep the club operating through the winter season while a long-term re-organization plan is developed. Club members, some of whom were in court Tuesday and who are understandably eager to see the club remain open, agreed to pitch in another $5 million as part of the CrossHarbor plan. 

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Saga of the Super-Rich

As Edra Blixseth and the Yellowstone Club return to a U.S. Bankruptcy Court on Tuesday, the central questions will not revolve around paying the club's debts -- but rather miring the club deeper in red ink.

The club's lawyers filed a motion on Monday to ask U.S. Bankruptcy Judge Ralph B. Kirscher to OK a second emergency loan to keep the club operating while in bankruptcy.

Two weeks ago, the club where only the best would do didn't have enough money for propane for heat, or the shuttle to move employees to and from nearby towns, much less enough cash to actually pay those employees, even for one more day.

That's when the club filed for Chapter 11 bankruptcy in Montana court. Chapter 11 allows a business to remain open while it makes a plan to pay its debts. The filing came in the wake of an ugly divorce between Edra Blixseth and ex-husband Tim, allegations of large-scale financial impropriety and the collapse of the high-end real estate market as well as the credit markets that funded it. 

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A study released Monday shows that while on average, Montanans have about the same access to the Internet and other electronic media as the rest of the nation, there is a large gap when it comes to the state's most rural places.

The study, by Montana State University professor Richard Wolff and the group Montana Common Cause, shows Montana's metro areas may have access to online services and information but rural areas are vastly underserved, particularly when it comes to options for providers and access to local government services via the Web. Also, while metro counties tend to have access to government services -- many have county or municipal Web sites -- they often don't have suite of services that other local sites in the country offer. 

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Montana Economy

Montana's unemployment rate has inched upward to a still-healthy 4.8 percent, according to the most recent figures from the Montana Department of Labor and Industry, as every sector but healthcare and hospitality services contracted.

"Overall, Montana has been weathering the economic situation pretty well," said state economist Aaron McNay. "I see Montana following a path similar to the rest of the nation."

Montana's economy, it seems, is slightly better -- or its downturn is delayed -- compared to the national economy. The national unemployment rate in October hit 6.5 percent, up 0.4 percent from the previous month. Montana's rate increased at half that rate, at 0.2 percent. Montana actually added 900 jobs, according to one set of statistics, from September to October.  

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Energy Policy

The Bush Administration, as part of its effort to lock in policies via administrative rules before leaving office, has put takens steps to open 800 million acres of land in the West to oil shale exploration. The move comes just a few weeks after a moratorium on shale oil leases expired. The independent investigative news site Pro Publica has an in-depth look at an issue that is likely to provoke much controversy in Colorado, Wyoming and Utah for many years to come.

While oil shale has a lot of promise, as detailed by Hal Herring here at NewWest.Net a few months back, it also has potentially immense environmental consequences, and it's not clear it can be extracted in a way that ultimately yields more energy than it consumes.