Poor Little Rich Club Lives On
CrossHarbor Wins Battle for Yellowstone Club
The posh private club near Big Sky gets a new lease on life following a harrowing journey through bankruptcy court.
By Jonathan Weber, 5-18-09
Marking the beginning of the end of a great Western soap opera, CrossHarbor Capital Partners today won a bitter battle for ownership of the bankrupt Yellowstone Club after reaching a settlement agreement with lender Credit Suisse.
The deal, which came in the wake of a disputed auction of the club late last week and was signed only minutes before today’s court hearing, calls for CrossHarbor to pay $115 million in cash and debt for the club, in addition to providing a $15 million fund for trade creditors and up to $75 million in working capital going forward. The Credit Suisse lender group, which is owed $310 million, will get a new note for $80 million and could collect additional funds from a so-called “liquidating trust” and from the sale of the Chateau de Farcheville in France.
All unsecured creditors, with the exception of some members with special claims, should get paid in full under the deal.
U.S. Bankruptcy Judge Ralph B. Kirscher approved the settlement today, though final approval of the club’s Chapter 11 bankruptcy reorganization, which will incorporate the settlement, will probably not happen for another week as a variety of comparatively minor details are resolved.
Credit Suisse, which has waged a fierce and sometimes quixotic battle to gain control of the club on behalf of its lender group since the bankruptcy filing last fall, was under heavy pressure to cut a deal after Judge Kirscher ruled last week that bank’s behavior in brokering the loan was “predatory” and “shocked the conscience” of the court. The ruling “subordinated” the Credit Suisse lender group’s secured claim to those of unsecured creditors and thus took away the leverage Credit Suisse would normally have had as the first lien holder on the club’s assets.
The Judge’s ruling against Credit Suisse, which came following a bankruptcy court trial known as an adversary proceeding, was only a partial and interim ruling. Under the settlement, the claims against Credit Suisse will be dropped, and thus the bank might escape what would likely be a highly negative final ruling in that case.
The settlement does not, however, include Tim Blixseth, who was also on trial in the adversary proceeding for breach of fiduciary duty and fraudulent transfers in connection with the original $375 million Credit Suisse loan. Blixseth now faces a number of legal claims - from the club, from Credit Suisse, from the minority shareholders in the club, and possibly from his ex-wife Edra - in connection with his transfer of money and assets out of the club.
“I’m extremely happy for the club,” said CrossHarbor principal Sam Byrne after the hearing Monday. “I think it’s the right thing for the club and I think Credit Suisse recognizes that.”
“I’m going to get some sleep,” he added.
Edra Blixseth, who is nominally the owner of the club but will be out of the picture once the sale to CrossHarbor is complete, called the outcome “bittersweet” for her personally but a good thing for the club.
“The whole goal was to get the Yellowstone Club on the right footing for the members and the employees and the community, and that has happened,” she said.
Edra Blixseth is now in personal bankruptcy and owes more than $100 million to a number of banks and other creditors. “The personal toll on me was not at all what I expected,” she added. “I was not expecting the personal attacks from Tim [Blixseth] and Michael Flynn [Tim Blixseth’s lawyer].”
Tim Blixseth and Flynn have in alleged that the club’s bankruptcy was Edra’s fault and that she had conspired with Sam Byrne to get the club on the cheap.
Byrne and CrossHarbor appear to have broad support from the club members, who have also been invited to participate as financial investors in the CrossHarbor deal. Jonathan Alter, an attorney representing a large group of members, said the members were “extremely satisfied” with the outcome, and especially that it assured that the member contracts remain in place and that all vendor and employee claims will be paid.
The settlement agreement also included giving Credit Suisse and its noteholders the right to co-invest alongside CrossHarbor.
The liquidating trust that is part of the plan will be responsible for collecting any outstanding money and paying off claims according to priority. The funds will apparently come mainly from any money that can be collected from Tim Blixseth, who took $209 million from the Credit Suisse loan as a “loan” to BGI, the family holding company. While responsibility for the BGI loans was transfered to Edra Blixseth as part of the couple’s divorce settlement, Tim Blixseth could be still held liable, especially if Judge Kirscher rules against him in the adversary proceeding. The trust could also collect money from the sale of non-core assets, including a golf property in Scotland.
The French chateau, which itself is apparently in bankruptcy proceedings in France, will not be part of the liquidating trust but rather will be given directly to Credit Suisse as part of the settlement.
The money for vendors and other trade creditors will include about $2 million from the sale proceeds and $15 million from the trade creditor fund. For the money coming from the liquidating trust, the first $2 million will also go to unsecured creditors, the next $15 million will pay back the trade creditor fund, and the $10 million after that will go to unsecured claims that are not trade claims - mainly claims from people who joined the failed Yellowstone Club World, from Greg Lemond and his associates (who are still owed money from a prior legal settlement), and possible from the minority “B” shareholders. Only then will the Credit Suisse group get any more money.
The club will now be run by CrossHarbor in partnership with Discovery Land Co., a developer of exclusive clubs around the country. Resolution of the bankruptcy should remove the uncertainty that has helped to freeze lot and membership sales, though it remains to be seen if and when demand might recover. Membership at what is touted as the world’s only private ski club has in the past required a $350,000 deposit, plus $18,000 a year in dues, and lots start at about $1.5 million.
Sam Byrne, whose firm runs a group of real estate investment and distressed asset funds, was initially a member of the club before he began to invest in development projects there, and he ultimately tried to buy the club from Tim Blixseth. His development plan includes more focus on condo development in the base area, and more skiing on one of the peaks at the 13,500 acre property.
For more coverage of the Yellowstone Club bankruptcy and more articles about the collapse of the high-end resort economy in the West, click here or see a list of related stories below:
- Citing “Naked Greed,” Judge Eviscerates Credit Suisse in Yellowstone Club Case
- Yellowstone Club Bankruptcy Showdown Enters the Home Stretch
- Yellowstone Club Auction Draws Few Bidders
- The Case Against Edra Blixseth
- Yellowstone Club: How to Go Broke on $375 Million
- Yellowstone Club: Tim Blixseth, Credit Suisse on Trial
- Bankers on Trial: Credit Suisse, the Yellowstone Club, and the Real Estate Collapse
thank goodness its all over, well this part anyway
Comment By WeeJohnnyMc, 5-18-09Blockhead....Time to settle the bets!
Comment By Insider99, 5-18-09Shall be interesting to see who is going to manage the resort going forward. Discovery Land Company would seem to be not well received in a couple of communities they have developed.
good luck to all of you facing more legals challenges, no resort is going to be much fun if you are spending all your time worrying about getting in front of more judges.
Well, Ch wins i guess Hats off to everyone who did there part! Lets party now! Get really drunk to numb the pain.
Thanks for good spirited debates and I admit defeat. I can not compete with a 'Win at any cost'
JW, whats this about further litigation against TB, do you know something direct from the judge n this as it sounds like you have the inside scoop? Is the judge going after TB is this what you are reporting? Please do tell as you seem to know every move of the courts and clearly I do not. Whats the future hold for TB? How about EB. clearly my sources are wrrong and yours are never wrong. Information please.
Approve the plan and pay the employees, pay Eric Ladd, pay the creditors and do it this week if you can!
THe party is over and the FAT UGLY lady has sung the BK song for SB! I am a good ooser and well lets do whats right and support the new owner but get the club back to being private!
Best to all my fellow bloggers! I still want a run named after me or at least a EVIL drink named after me at Buck t 4 and WML.
We got you! Blxware was monitoring this from day one and played you all. Hard to imagine half the staff at New West was blogging! All fair play as the staff were great attacking Blockhead and well Sharkbait was the best one of all in this saga of the rich and famous. Now careful as with Blxware we can we in 5 locations at once, use computers from different IP addresses to fool those wh think they are watching but in the end, we were watching and playing you. It was all in good spirit but to also be a voice and understand who was behind the push for CH. NEW West, are you surprised Blxware works? So funny. well done however on your reporting. Best Blog site for YC and I hope you follow the story to insure the employees get paid and the locals. Back to work now for the blog people. Good luck to everyone, Seriously, it was a good ride and now we are left to say goodbye!
Comment By WeeJohnnyMc, 5-18-09Oh come now Blockhead...settle your bets.
Comment By Jonathan Weber, 5-18-09Just in case anyone is wondering, the above from Blockhead is completely ridiculous, no one from New West is blogging, I certainly don't think anyone has been hacking our server, and the Blxware technology has nothing to do with that anyway. Not sure why at this stage Blockhead would again insist on propagating such fantasties, but there you have it.
OK, hearing is over and I have work to do updating the story.
Yes, they will be settled once approved. Why is no one lese running this story of the victory win of CH? Please tell me this is not one of JW tricks as AP has no news as we just came off the phone with them, BOZO CRONO has no news of this either when contacted and Bloomberg has no clue either. Robert Frank knew nothing of the deal at WSJ wealth report and Ms. Kerry D at forbes said there is no pending deal so, whats up JW? The judge call you personally on this one thanks to your twitter issue with him. Come on tell us the inside scoop. This is like HUSH HUSH LA style and Danny Devitto. Danny kinda looks like JW right?
Comment By blockhead, 5-18-09JW....love to get under your skin. I eve got a reply before the update! See, I have the power to make people react! Boy am I good Cant wait for the update.
Comment By WeeJohnnyMc, 5-18-09Hey Blockhead...
http://online.wsj.com/article/SB124267438287731485.html
Thanks WEWE...RF just sent me the release a minute ago. He is a great writer! did many great pieces and he has a great book as well. True Star Reporter.
So now that the club is decided, what is the future of the trial? Did the Judge rule on the other matters? What was the decission on the Promissory notes, the famous 209m and the decissions related to TB? JW, did they state anything or was that dismissed in light of the outcome?
Why did the judge stall on his ruling with CS and TB while the auction went on? Was the judge pushing CS to work with CH? If that is true... that doesn't seem right. Your thoughts? I understand the story is still unfolding so look forward to reading more.
On the subject of TB and CS… media reports state TB paid interest and made every payment on the loan that the judge called “predatory” lending. The facts are the facts despite personal opinion... which this blog has in chorus. I would like to understand the facts. On that note, what is going on with EB’s BK? Since that is what brought this on. Through what I've read on the blogs... this is the story. People are accusing EB of some really heinous and criminal behavior. What is going on with this? When is her trial? Can someone also explain the legal financial documents EB signed, at her divorce, that were produced in court during the TB CS trial? It would be great to get the facts about this in a well reported story than innuendos on a blog site.
EB's BK brought this on??? Really? So tb overextending the entire yc and stealing from his employees (fact) didn't do it? Did you jump on another computer with a different IP bh? This has gone through millions in legal fees and our court system. Apparently nothing will satisfy you. So show your identity bh. That was part of the deal, remember? There's facts galore and you can't accept them. Big surprise. Don't worry, more will come out about tb and eb. But for now, the club belongs to ch. Good or bad we will soon see.
Comment By Steve Kelly KPSI Palm Springs, 5-18-09As a broadcast journalist here in the Palm Springs area where the former majority owners of the club (Tim and Edra Blixseth) have held their sway, I would like to personally thank Jonathan Weber and the staff at New West for their outstanding coverage of this whole very complicated matter.
Comment By Blockhead, 5-18-09Back off Ms B. Nancy, if I have something to say I write as blockhead. JW can you set Nancy straight on the matter that the blog is not me please as she seems to have re-inserted the snow shovel to far during afternoon tea break. Bigsky protologist is up skiing and the shovel needs removal! Nancy, if you have something to say to BLOCKHEAD write it but do not lump me over someone else's blog. JW has been good to delete blogs from other IP addresses.
So Nancy, are you really tha middle aged SR gal we love to call BHB, from the Klampets? The club beongs to CH, lets see them preform. As i wrote i already admitted defeat and wished them well and mot of all to pay the employees and local contractors and then pull out the check book for the 75m in working capital.
Nancy, since you know so much, can you tell me what did the judge say about the trial? When is the verdict. Judge seems to be the state hero and served up a real winnner! so this must mean he assumes CS is guilty on all fronts of the predator loan and that TB is in the clear? I can't see how thei Judge could now rule on Fiducciary since he wrote the riot act on TB and EB but what are you hearing between the bon bons and CH updates?
Steve Kelly KPSI Palm Springs
Fully agree, JW did a great job and this truly is the number one place to get updates on the club and lively debates. By the way, nice piece about Edra at Christmas throwing her staff out of PC and not paying them. JW did a great call in interview for that story and we hope you air the results on TV tonight and carry the live coverage of Edra being escourted out of Sam Byrne's new Golf Estate. Well done to both of you!
On the DLC front, it was mentioned a several times when the season opened at YC that CH and SB didn't care to much for DLC...interesting to see who is "The Management" for summer season
Comment By report the facts, 5-18-09Nancy, I have been observing this from the sidelines and my questions are valid. So dont try to discredit me by accussing me of being BH. I want the facts and not emotion or personal opinion. So i will not go there with you.
Comment By Friend of Big Sky, 5-18-09good outcome for the YC, and good outcome for all the employees, at least as far as prior amounts due are concerned.
now the members can make sure their wishes on staff and the culture of the club are heard and respected. that will be the key for YC as it starts its new life and looks to protect the great people who work there and have perservered through all the muck.
there will be an article in the NY Times in June covering much more of the EB/TB story, so that is something we can all look forward to reading. after this saga the book and movie rights are probably soon to follow.
what was clear through the process was that the Judge really took the ongoing viability of the club as a primary concern. that is the idea behind BK after all - to restructure debt, obligations, so that the entity can continue going forward. seems like he did an excellent job of that, looking after as many of the constituents as he could. CS holding a note on the club with CH in charge - certainly that will increase their chances of getting paid some of their money back. DLC - that is where SB and the member voices come in as to what kind of club YC will be.
many folks were blogging yesterday about how this concept is not viable. you may WISH that is so, but of all the clubs in the U.S., this one is unique and really offers something that no other resort or club can offer. with professional management, YC will continue to be successful.
remember - even with TB's erratic leadership, the club sold over $500M of real estate - less than half of what is available. the infrastructure in the ground now is being acquired at a very good price. it seems to me that CH/DLC will be able to do much at least as well over the next few years.
BH - in the movie, you should get to play yourself. good fun.
going forward!
Report the Facts
looking at the proceedings, i am certain the Judge wanted CS and CH to work together. the message was probably something along the lines that CH/DLC offered the best management for the club's development and operations, and that if CS wanted to recoup any meaningful amount of its outstanding notes, it needed to structure a relationship with CH. the bankruptcy trial judges have have only one thing in mind - to get the entity, if possible, on an operational basis again. to that end, they really drive toward settlements.
on the EB/TB side - that appears to be headed for civil/criminal court. i would think most of the issues there are not even YC issues, once the bankruptcy restructuring and claims are settled. if TB really made the payments to CS, then all that does is make CS more comfortable settling with CH and working with them going forward. not sure if that really means anything in the further adversarial proceedings that will now take place.
DLC is a professional management company with very high standards, but I am not sure they have the same vision as YC members. DLC it kind of "hollywood". YC members want to be in the background.
Comment By Yes we can't, 5-18-09Blockhead, correct me if I'm wrong but by my calculations you have got precisely nothing right, and now you attempt to protect your ego by saying you were getting under people's skin. Finding it hard to say you wrong, or are you still waiting for Tim's white knight late mystery bid?
So Blockhead, are you going to continue to do everything in your power to help Tim head for the hills to avoid getting his dirty assets reclaimed?
Watch Timmy run.
PS I also think Tim's YC Cross Harbor introductory letter may get a personal signature from Sam himself :)
PPS also Blockhead remember if Credit Suisse sue Tim Blixseth you owe me an island.
to Friend of Big Sky,
How much of those sales were to end users? I don't think it's fair to count sales to developers who had to pick up multiple memberships that are then included in the cost of the mega-house or condo as actual sales of club property. Someone does have to eventually buy those right? Or is one of the new directions going to be timeshares and rentals? That might change the exclusive tone you crave there.
What it offers is fantasy. Like Mr. Roarke and Fantasy Island kind of fantasy. I'm guessing you own more than one house in there, and are trying to stay positive on your future. I'm sorry for you, you are the one wishing.
I don't think selling 350 memberships in times past is any indication of future performance at all. Especially the high flying times of the last several years, where the fundamentals of real estate investment took a powder and gave way to overleveraging and musical chairs type speculation? The ultra high end niche was already a shallow pond, and who's to say the market isn't already fished out? Absorption is going to be veerrrry slow.
Also, acquiring land and infrastructure at well below replacement cost allows the land basis to be reclocked to sell at a lower price point, true. But if you are an existing owner or member will you be happy to see the market flooded with developer lots or cheaper per-sf product that are well below your pre-economic meltdown basis? That becomes a political problem for CH, and changes the demographic and socioeconomic profile of the club. If members have so much money that they don't care about their values, or don't mind rubbing shoulders with the "lower" socioeconomic classes to whom YC has suddenly become accessible, then I guess it's fine.
I don't have any axe to grind or "wish" that YC won't succeed at all. I have no vested interest in the outcome either way. I don't begrudge the wealthy their wealth. I am empathetic to the local community. I just think it is wishful thinking to believe that glory days of the past are coming back.
storymilldawg:
To be honest, I don't think it would bother most members if the average square footage of the homes at YC was lowered, if prices were in an area that attracted second home owners and not third and fourth homeowners, and if all forms of elitism at the club were eliminated. The real value of the homes at YC should be based on the family, friends and memories within them.
It has been interesting to see, through
the words of Blockhead, the pathology of
Tim Blixseth. A case--in or out of court.
p.s. Ya gotta pay your dues if ya wanna
sing the blues. Start singin' Tim...
GC - you are completely correct. the members at YC now want nothing more than that. and 400 inches of powder every year of course. ;-)
Comment By mochsie, 5-18-09Most of the motley crew out there can probably out-ski the elites anyway! OPEN IT UP. Let the Montana folk that love the mountain offer up their respect. I'll bet the mountain is yearning for it after being "loved" by Blixseth!
Comment By Former YCer, 5-18-09Congratulations to CH. Let's hope all of the locals get paid, that DLC sends it troops packing and rehires the locals that the members truly appreciate, and the YC can get back to its original mission - providing a wonderful vacation spot in a secure, private environment.
Looks like EB and TB will be spending many more years in various court proceedings. YCers can only pray that they don't get dragged into that legal mess any longer. Time for YCers to enjoy their club!
BH: I believe you instigated the bet with WeeJohnnyMC...Lets see, you owe him a bottle of Eagle Rare 17yr along with coming out of the closet. Actually, who really cares about your identity. Cheers to everyone involved!!! To those still casting negativity about the clubs future success I say find something better to do.. Personally I think this will put $$$ in the hands of those that are already owed and $$$ in the hands of those willing to work hard. Thanks JW, Judge and everyone involved. The community needed this resolution. I know the YC will continue to be a great place. Adios Amigos!!!
Comment By Report the facts, 5-18-09questions about CS/CH deal…
What happened to the 232 million dollar secured claim in favor the CS’s bond holders granted by the judge in this process? Did CS settle to protect its name after the judge interim order ruled that the CS loan was predatory and “shocked the conscious of the court.”
??? about CS/TB lawsuit…
What will the judge do after his interim ruling? How does this affect all the other CS loans mentioned in court? How many of these loans did CS make?
??? EB BK…
Does anyone know what is going on here? There are very serious allegations being made. Not just here on the blogs but by employees, banks, personal friends, local businesses in MT/CA, etc. When is this trial scheduled?
So they paid 115 mil, + 15 mil + 75 mil = 205 meeeelion dollars.
With a total debt of 310 meeelion it seems CH only got 30% off,
not that good of deal ?? Doesnt seem the best of deals to me.
You YC'ers are lucky CS didnt get it because they are not a resort company.
It would not have been pretty with a pissed off management like them. When in doubt shutter out is their policy.
We're not out of the woods yet, but we're closer and I am cautiously optimistic that we've taken a step toward real resolution. I'm impressed with Judge Kirscher and what was done to expedite the process. I hope that this case serves as an example to other bankruptcy courts. Although much of the bankruptcy was orchestrated by others he did a fine job of holding the line with respect to protecting the local community, club members, and innocent creditors.
Comment By Former YCer, 5-19-09Montana Bond....couldn't agree more. The judge did a great job in the true Montana fashion. He took care of the innocent creditors (those folks who work for a living) and let the fraudsters fight over the scraps. Still have EB and TB to deal with though. That will be interesting to watch. Hopefully they both have to deal with Judge kirscher too!
Comment By deep throat, 5-19-09Although this facet of the melodrama is over the litigation between tb,eb,and cs is just about to get underway. Teflon Tim's lawyers are drooling at the potetial litigation with Chechi. Teflon Tim my freind I would settle for pennies on the dollar if I were you. The big cheifs in Zurich are ticked off.
Lots of bad press here in Europe. The Swiss Government is starting to ask a lot of "unofficial" questions regarding how CS is investing its pension funds that it cartakes on behalf of its citizens. Its going to get a lot uglier than annybody thought. I would gather that the YC is safe but Teflon Tim and "plastic bubblehead" are not.
Off to Cyprus to dine with some old freinds
Deep Throat
Now taht it is finally over, does anyone (JW?) have a good idea as to when we will see some action up there in YC.
I understand that CH has promised in their bid to set aside money for improvements. Can anyone tell me how much that is, what they plan on doing with it and when they will get the ball rolling>
There are lots of local people who are ready to get working!
Concerned, it will take this week to wrap up the lose ends on this agreement, then CH will need to map out its strategy and determine how to deal with DLC (i.e., use the "local" management team the members love, or keep the outsiders). If CH keeps DLC, it will signal a major shift in the atmosphere of the club. As many have stated, DLC attracts a more "hollywood" market. DLC members told me about some pretty crazy activities at DLC hosted parties, like having topless/bodypainted waitresses (at their El Dorado project in Mexico) and other sundry activities. Not the type of family activities the YC is known for. In any case,DLC was a product of the boom years and has never managed through a bear market like we're experiencing today. CH appears to have a lot of experience in distressed asset management, so hopefully that experience will lead the YC back to its original mission.
In any case, the "gravy train" of spending on capital improvements isn't likely to be renewed until CH can get the YC reputation turned around and begin to bring in new members. New members will want to have proof that CH can make this work and provide a stable, family environment for years to come. Best wishes to CH, the YC members, YC employees and YC suppliers. You've all invested a lot over the years and deserve to see this turn out well.
It is safe to say that the era of the road to the YC paved with gold is over. CH spent a lot of time vetting contractors with their investment with the club over the past several years and they pretty much know who they are going to use for what projects. If those projects go I would highly doubt that you are going to see a frenzied bidding process to multiple companies like we just saw with the one house in the club. It is my understanding that of the 4 contractors that they worked with there is one who is lucky they were not litigated to the hilt for malfeasance.
Dave D
Can one of you highly edumacated and knowlegable bloggers please explain to me WHY the credit Suisse loan was any more predatory than Sam Byrne loaning Mrs Blixseth $35m for one month, in return for an asset arguably worth $100m...when he had intimate knowledge of her finances AND inability to pay?
Given this info, why then would a judge rule in favor of a lesser bid, if not for one of two scenerios.
1. He is on the dole
2. He wanted to look good to the locals
Of course he could be stupid, but I will give him the benefit of the doubt since he is from MT.
I concur with Dave D that money will be spent much more slowly going forward. $75M over time for capital improvements doesn't really build the Taj Mahal once you've dealt with infrastructure needs, etc. CH would not have done the deal if they didn't think they could make money, and the only way to make money will be to run the YC as a real business. That means, yes, caring if you lose money and taking action not to. Strange concepts up there, granted, but I'm sure most members understand a P&L;and won't expect things that aren't financially feasible. I, for one, am fine with it all, as long as the ski experience is great, there's a beer at the bottom of the hill, and any movie star that shows up waits in line like everyone else.
Comment By Dave D, 5-19-09Hi Blockhead. Blogging as Dumb Redneck now are we?
Comment By mochsie, 5-19-09Good call, Dave D.
Them thar grapes is purdy sour....
Dumb redneck does feel like Blockhead v.2 with a spelling upgrade :)
CH will try to operate YC in the "Real World." For starters, the annual operating budget will be slightly more than half of the previous budget. The trick will be to make surgical strikes on the cost side that won't be felt in the service levels...
Dumb redneck, the judge didn't like Credit Suisse as they had been given several opportunites to provide temporary financing to keep the club operational over the last snow season and Credit Suisse not only wouldn't provide a further cent, but they also fought with all their legal might to shut the club down. As predatory as as Cross Harbor's loan was/is, it was the only money being offered from anywhere to keep the club open at the time, and the judge believes it was in the better interests of members/club than Credit Suisse's actions of the time.
Comment By Blockhead, 5-19-09you butt heads, i use my own blogger name, ask jw. working on a three pager
Comment By WeeJohnnyMc, 5-19-09Blockhead....why don't you start with asking where you can drop off my Bourbon and coming out of closet. A bets a bet. Hopefully your pay up will be more truthful than most of your blogs.
Comment By dumb redneck, 5-19-09Yes we can't - Thanks for at least having the courage to take a stab at an answer. Dave D was no doubt stumbling for a thought. He clearly works for neither NewWest, nor Blxware, since he thought I was Blockhead. Furthermore, my writing skills are simply better.
The question still however has not been adequately answered. Why was SB's loan to EB, any less predatory than CH to YC? The reality is that while many people on this blog had some miraculous "foresight" regarding the real estate market in 2005, the market did continue to run for another two years before imploding. One could easily argue that overvaluation was not a given in 2005. On the other hand, SB was intimately involved in Edra's affairs/finances up until the 11th hour. He knew in September of '08 that she had no way of paying back the $35m loan, so to "float the club" for another season was a risk free decision. He used factual and proprietary information to not only get control of the YC, but PC as well. In the meantime CS and every other financial institution were in lockdown due to the credit markets. To say that CS simply did not "want" to save the club, is naive.
Therefore, your answer is incorrect. The judge could not in all honesty award the winning bid to the LOWEST bidder based on this theory. I truly believe that any open minded person who looks at the facts as they pertain to SB and CH, would come to the immediate conclusion that SB hands down wins the award for the most predatory business practice in this entire saga…Which means that the judge is either stupid, or on the take.
SB's loan to EB was less predatory because it didn't involve a few thousand locals. I hate to say it but yc has been income for a lot of people. Without it there would be a mass of people headed for the unemployment line and further financial disaster. Luckily for the Big Sky area, Bozeman does not have good jobs readily available. The yc has had a good portion of the locals travel through the revolving door due to terrible management. (aside from 2-3 vp's through the years) Hopefully that will continue to change for the better. You're also talking about a loan that is 10 times less than the one CS gave out. Seems pretty simple to me.
Seeing as how we haven't seen bh's 3 pager yet, could he please be booted once and for all? He won't give his identity like he said he would and he is nothing but pointless drivvle and has proven that he knows little about the real issues at hand. Unless he can tell us where all the money that tb has and what tb is going to do with it. Maybe tb will donate it to the Red Cross. LMAO!!! Remember, "the money is in the bank!" Luckily we have more timisms to bat around. Seriously, enough with bh and all his aliases.
Imagine, a self proclaimed billionaire borrowing $375 million. That doesn't even make sense. Good riddance bh. Your gravy train has left town once and for all. Applications are probably being accepted at yc and sr.
All your points are taken and I will state clearly that in essence I agree that the Cross Harbor loan was monumentally opportunistic, and in my view, predatory like a circling vulture. I do think that the judge took that into consideration that they did put money in to keep it operating where Credit Suisse, thinking they were first in the creditor queue, wanted to liquidate, forsaking small creditors and the community. I think the judge feels, no matter how opportunist CH has been, that the club's interests and Cross Harbors success are more aligned through an operating club, rather than to be put in the hands of faceless hedge funds trying to recoup their investment.
As for lowest bidder, I think the shortfall after smaller creditors are paid determines the haircut for Credit Suisse. Pure speculation here but I think the judge doesn't mind Credit Suisse facing the consequences of it's loans and also let them chase Tim Blixseth and his YCW spoils. Credit Suisse and Tim can batte it out in court until Mike Flynns heart/wallet is content now, but it shouldn't affect the Yellowstone Club.
Cry me a river Nancy. The "few thousand locals" who were damaged by the Blixseth's folly, would have been eventually taken down by other means, if not their own stupidity. The roofer driving the Escalade? The real estate agent with multiple rentals? The interest only loans on a 5 year ARM? You ALL fed from the same trough. The CS loan to YC did not destroy Promatory, or Tamarack, or the myriad of other elitist compounds. The CS loan did not cause the real estate meltdown in every city in America Nancy. Are all of the banks that made home loans in Big Sky responsible for its collapse? Were all of THOSE loans Predatory? Just fewer zeros Nancy. Where is the accountability Nancy? Why is it always someone else’s fault that YOU failed?
Blockhead had clearly taken sides, as have you. Why is his drivel any more than yours?
In the end, you all traded an uneducated timber salesman who hated his wife, for an Ivy League vulture capitalist. Don’t get me wrong, as I aspire to be closer to SB than TB, but let’s call a spade a spade.
Besides whining about the local fallout, the number of zeros and her obvious distaste for all things Blixseth, Nancy has failed to adequately answer my question.
I am starting feel like you all failed to think about this.
Thank you Yes we can't for a thoughtful and (unlike everyone else) non-emotional response.
I can only speak to what I have read, but it seems to me that SB had made an offer for the YC in January of 2008, only to be stopped by the emergence of another bidder. And that in the escalating divorce battle, Sam Byrne began to play both sides of the family. First he was in "Camp Tim". Then he switched to "Camp Edra". Is it such a stretch to believe BOTH Tim and Edra's accusations that Sam Byrne had intended to BK the YC from the moment that he saw the opportunity posed by the infighting? Add this to the “opportunistic” loan that Sam gave Edra last summer, and I fail to see how ANY neutral source could come to a different conclusion.
My guess is that if Credit Suisse had been privy to EB’s finances as was Sam, they too might have offered $35m plus another season of operating funds in exchange for PC and clear title to the YC. Of course, as the administrator of the bonds, that is not solely their call.
Still, I believe that you have come the closest to answering my question. Like someone mentioned many blogs before…The judge handed down some old fashioned Montana justice. It may not be right, or fair, or even reasonable, but for the time being the people of Montana can at least “feel” like justice was done.
Blockhead, I laugh in your general French direction. What are you going to do now that CH won and will keep the whole YC program under the radar? You need serious professional help.
JW, thanks for keeping many of us in the loop that have been and will be affected by this. And good luck to SB/CH going forward.
DR -
January 2008 - there was no other bidder. that only other bidder or potential bidder was gone end of 2007. the reason SB pulled out was due to TB's lack of willingness to provide adequate financial diligence, even after CH/SB spent over $4M trying to recreate several years of YC finances.
Did SB play TB/EB? perhaps. will have to see what happens over time between EB and SB. my suspiscion is that EB is far more welcome at YC in the future than TB.
Was CS's loan predatory? the reason the Judge ruled it so was because they issued the loan with virtually no diligence and took a significant fee that was immediate income and profit to the partners running that group at CS. CH's loan to EB may have been opportunistic in the extreme, but CH did not collect a loan generation fee that was millions of current income. Also, EB asked SB/CH for the loan after the french chateau sale collapsed. Pretty different circumstances to me.
TB was great for the creation and launch of YC. but he was his own worst enemy the last 5 years.
Friend of Big Sky- Public court docs, transcripts, and news articles ALL show other suiters.
How do you think CH/SB make money? They are a fund!!! Yes, clearly SB took no compensation for his year long effort in acquiring the YC. Truly amazing.
My stockbroker also charges 2%.. Maybe I should sue...In MT court of course.
BF Big sky
BS, Sam collected 3 percent on the loan to Edra up front: You want a copy of the loan you ego maniac§ Thats 1m in up front fees. It was predatory. Do not worry, a major lawsuit is coming against Edra and Cross Harbor and this is only beginning. Rest not my little friends, the 3 pager is coming and you should read it and freedom of speach is a good thing, if not we will buy a advertisement in the Bozeman Cronicle to al read:
So nancy; who the heck are you: Are you that middle aged lady up at sunrise ridge? Tell all of us so we can identify you and i will identify myself. In fact why not go to a chat rom for a private conversation? I am more than game if you are?
the "other" suitors never so much as put up a dime of earnest money nor did they have any meaningful equity organized. perhaps i should say "legitimate" other suitors.
CH charges its investors a MGMT fee on funds under management. its real profit comes from its gains on its investments where it takes a significant share of the gains and divides that among its partners.
EB asked for CH to help on the loan against PC...because of another deal that was "done" falling apart. its important - she asked for help and there was no one else around. not at a scale that mattered.
BH - i hope that the next 3 pages you write are more accurate than the last 30 or so posts. otherwise we will have to set up a separate "YC Fantasy" blog for you. Maybe we can follow the spriit of Tolkien such as
"the fellowship of the conspiracy"
"the two towers of greed and concompetence"
"the return of the King (TB)" (well, at least not yet - but that is the wonder of Fantasy writing)
you may even get your own genre - slanderous fantasy.
Mr Harris I presume. Time to go back to the yacht club? Montana air has got you crazy and bored i see. 3 pager takes time as i have to reference item for you to easily find otherwise i have to listen to you ramble like above. Sounds like RED Neck needs to take you out back for a regular montana dirt role in fields. A person like you may last 2 minutes but then again, east coast boys are known to be all talk. Look forward to the lawsuits and some great fun along the way. Snow is melting and so is the facade you are trying to create. Bucks T4 Sunday for a roll in the dirt and a beer?
Comment By Yes we can't, 5-20-09Blockhead, could you please confirm or deny the following:
- that Yellowstone Club World deliberately lied to Forbes magazine in a written email claiming 25 initial memberships had been sold.
- are you personally owed any money by Edra Blixseth
Lets see what Jory Russell and Judith have to say about the loan shall we? He will not lie under oath so its going to be fun to learn about the HELP ME loan of 35m. You have to love it when people are in the eye of a huge storm on the way. Careful as lightening is going to strike and split the tree in half to expose the real issues in the coming days. Red Neck, who are? You seem to make me look like a CH supporter
Comment By Friend of Big Sky, 5-20-09there were never 25 memberships sold at Yellowstone Club World. so if that was put in writing it was a lie.
Comment By Blockhead, 5-20-09really, can you send the email in the blog? I know it had potential members but only 10 paid. Money from Edra? I just think she needs to have a good lawyer who specilizes in everything but civil and bk issues. Is Shapiro still alive? he got OJ off so maybe there is hope? innocent until proven guilty so i just hope she has good lawyers as her last firm in California got sanctioned and then had to change there name.
Comment By Blockhead, 5-20-09who sent the email? to whom Robert Frank? what is the date of the article? HELP as I have no idea what you are talking about?
Comment By Dave D, 5-20-09Hey Blockhead FYI
I drove past PC last night at sundown, parked the car and sang to my self "kum by yah" and thought of you. Truly a moment in time.
No moving vans, sherrif deputies yet or so says the locals.
Looking forward to your 3 pager.
Dave D
Was this one of the emails thzt DM hacked into Flynns computer by chance? Blxware is great at doing that, you know breaking into computers to get information and then write from computers making it appear to come from them. After all they catch terrorists right?
Comment By Yes we can't, 5-20-09Calm down Blixseth vaporware not Blxware :P ....
"In a May 2006 e-mail to a FORBES writer Blixseth gushed that he'd "sold out" the 25 charter memberships in one day. "I like it when the idea is validated by purchases," he wrote."
...
"Yellowstone Club World, in fact, never took off. Membership sales were halted in late 2006."
http://www.forbes.com/forbes/2008/0721/032.html
wow you are right. good fact which i can not defend. This was the article Kery Dolan did with sppon fed information when Edra was forcing a settlement with Tim, but the email sent is not true. Sales are about image, no different to anyone hyping things up, its an ego purchase which is why you do due dligence, something Sam byren does not do accoding to him not knowing about the 375m loan. check the facts as they say and believe nothing until its confirm, hence, no one did their homework on Sam or his mortgages. i would not do any work in that club unless 50 percent is up front in cash.
Comment By storymilldawg, 5-20-09"Sold Out" is just sales hyperbole lots of times synonymous with "I have 25 reservations and unconditional refundable deposits." This is the nature of promoters. They will tell you something is "sold out", when in fact there have been no closings at all, and the committment level of those on the reservation or interest lists is dubious.
Comment By Deep Throat, 5-20-09Had a interesting lunch with execs from BNP Paribras, RBS and Credit Lyons. There is a feeling that CS is going to reload and empty the magazine on Teflon Tim. Tim If you are reading this I urge you to reach out to CS and settle. You are sitting in the cross hairs and CS is going to go deep long and hard on your rear.
Deep Throat
DT, holy shit that was funny! I'm sure CS will be looking for a little cash from TB..Like I said a while back, time to buy some FOR SALE signs....Pigs get fed, Hogs get slaughtered comes to mind.
Comment By DS, 5-20-09what on earth will New West have to write about now? Pleeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeese find someone new to rake over the coals. I'm so tired of this. Let's talk about what's right in the West.
Comment By mochsie, 5-20-09WHY IS ALL THIS INFO IMPORTANT?
Because YC is only part of the picture. These kind of
ugly situations come to be as a result of fraudulent LAND
EXCHANGES that power brokers like Blixseth use to steal land
and tax dollars from the Public.
Be sentinels for your Public Lands in the NW, and don't let the atrocities continue.
storymilldawg, as the pricing for YCW was tiered tis is evidence of Tim's fraud and scammery and also support for the fact that Tim was getting more and more desperate as his scam unwinded still entrirely under his own control. He was also promoting the Yellowstone Club Pinnacle to create interest as sales were dead.
A ship's captain can hand over to a deck hand in panic, but Tim Blixseth very clearly captained this titanic until his cowardly bailout.
I'm guessing there will be an emerald cay property for 99% discount provided it's short settlement unmarked Mexican pesos available any day now.
Reading all of these comments is quite an education--it serves as a
reminder to me that no one is to be trusted when it comes to
"business." Personally, I find it all very depressing and am
quite amazed at how "ugly" and mean-spirited some people can be.
It seems many are actually thriving on this sad saga; are full of venom and sadly enough, deriving a great deal of pleasure from this most unfortunate situation.
In the final analysis it all comes down to one word--GREED.
Intuitive,
Human nature, maybe? People are angry. In a lot of cases they have been taken advantage of and let down by those in power with great financial resources, but without an accompanying sense of moral responsibility. People feel some sense of vindication when the mighty fall, particularly those that have pontificated from on high, often cultivating some public benevolent image and persona that is a lie to cover up less than honorable private dealings. Or, others that have acted arrogantly and abusive of their station, aided and abetted by those around them that want to ride the gravy train as long as possible.
Most people want to be inspired, led, to believe in something good. And when those we want to believe in let us down by being exposed as greedy, self-absorbed, flawed and foibled human beings, the disappointment is profound. The last 8 months have been replete with let downs by the leaders of our financial system and the regulators that were supposed to oversee it. Our economic system and its long term viability is constitutes the inextricable underpinnings of our ability to sustain our way of life and political system.
Those that disabused power and wealth for their own account, in both the private and public sectors, put their own gluttony and comfort ahead of the long-term interests of all Americans. They sold us out by propagating financial systems that they knew were not sustainable, and pretended the emperor had clothes to make as much as they could before the bottom fell out.
So, call it Schadenfreude, or mean-spiritedness, or whatever. I think at the root of it is people's bitter disappointment with the failings of people that we should have been able to look up to and not sell us all down the river.
Gotta hand it to SM Dawg, he/she has it right. Another thought from one who has read all these blogs, a get-paid in 3-6 months contractor in the early days of the YC and local and has professional knowledge of real estate. Its over. I have no idea what CH is thinking. Best estimates of large-scale economic recovery that leads to enough disposable income accumulated by the wealthy to buy YC memberships, much less build, are 5-7 years out. The economy and lost vapor millions will not support the current club unless members feel like ponying up the true costs of the operation. Sad to think but I so could see CH in bankruptcy in 3 years after pouring another $75MM down the rabbit hole. It was a good run for vendors and employees, Bozeman's main street, builders, interior designers, etc, bad run for members, but the whole ideas of super-wealthy flocking to Big Sky for gazillion dollar memories is over. There is no future at YC.
Comment By HoGro, 5-21-09Your otherwise fine publication devotes far too much space to the Yellowstone Club. Enough already! Surely there are other important issues in the region to report on. Broaden your definition of what the new west is.
Comment By Montana007, 5-21-09Flood,
I understand your pessimism given the amount of poor news in the media. However, I disagree and have a different perception of how and where money will be spent over the next decade. If in fact the economy has a slower-than-anticipated recovery and there is significant degredation of high net worth people that doesn't necessarily signify a poor decision to invest in a unique development such as Yellowstone Club. People behave in unpredictable ways, but there are many that will choose to reinvent their lifestyles as the economy continues to be sluggish. At some point it becomes unneccesarily stressfull for some people to attempt to increase their net worth in a troubled economy. You'll see some that choose to throw up their arms and walk away looking for a place to focus on their families and preserve their sanity rather than chase after the elusive dollar. Montana is a good place for that and a nice place to develop your new game plan. Not everyone will choose to or can afford to purchase in Yellowstone Club, but it doesn't take very many to make the club successful. You can get a place in Yellowstone Club for under $5 million right now and you are on the hill and part of something that isn't available anywhere else. You can't get much in many resort areas for that price. It's important not to underestimate the uniqueness of Montana and the unpredictability of how and where people spend their money in uncertain times. Only time will tell for certain, but I'm quite optimistic that we are on the cusp of a run on the real estate market in southwest Montana. I'm not saying tomorrow is the day that everything turns around, but my prediction is about 12 months from now it will be irrefutably improved. The bottom line is that Cross Harbor has already invested a lot of money in the club and needs to invest more in order to protect their past investment. It is a risky business, but they will either look brilliant or brainless in 10 years. There is no benefit in being a pessimist. Go get some fresh air and sunshine and find a way to make whatever your dream is work for you.
Also... if we are in fact poised to experience inflation, real estate is one of the best places to be. Yellowstone Club sells real estate. Why not buy and finance at today's dollar and pay it off with tomorrow's devalued money? That's my plan.
Comment By "No one of consequence"., 5-21-09"By HoGro, 5-21-09
Your otherwise fine publication devotes far too much space to the Yellowstone Club. Enough already! Surely there are other important issues in the region to report on. Broaden your definition of what the new west is."
\\Sarcasm\\ Because like ya know, in a recession, hundreds of millions of dollars going into the local economy only matters if it comes from Obama. Dude. \\End Sarcasm\\
Consequence - Great one!!! Love the sarcasm.
Comment By sidelineobserver, 5-21-09Montana007,
Your name alone says volumes of how highly you think of yourself. I don't think you get what has happened in America.
The anger, right now, is actually subdued. But it will rise, a little at a time, and either be appeased (and not by Obama, dude of no consequence) or not.
The people who invest in the Yellowstone Club, as members or member/developers, can pontificate all they want about how losing 30% of their mythical net worth has humbled them into realizing what's really important. But it doesn't mean crap to the carpenter who lives hand to mouth and hasn't been paid for 6 months.
The trickle down of a recession grows in magnitude the lower it goes. We don't lose one of our vacation homes, we lose our only home. And it doesn't sit well. And it doesn't make us all optimistic about when the wealthy will patronize us again with their benevolence because they want to spend quality time now with the kids they haven't watched grow up.
Cross Harbor isn't going to turn anything around. All that has been resolved is where Sam And Friends will ski next year.
Do I want to follow my dream? Hell ya. Can I afford to move to southern Montana? Hell no. I can't even afford to move out of my mother's basement, let alone into a bargain priced $5mil home. I didn't make irresponsible investments, I didn't buy a house I couldn't afford, I didn't max out my credit and then ask for more. But I am suffering the consequence of all who did. Especially those in the caste of eligibility for Yellowstone Club membership.
I'm not sure I'd want to be in that family atmosphere with my kids, anyway. I wouldn't want them thinking that quality of experience comes with the exclusivity of being only with those in the same income bracket.
Well, I've said my piece. I'm done now with following this soap opera. I have no sympathy for anyone involved. It's almost been like a symbolic feeding frenzy, and the worst hasn't even come.
Sideline Observer,
Man, you are so RIGHT ON. Thank you for saying it, and putting it just like you did. Perfect.
You write like you speak, OO. I hope you use your skill to do good.
And good luck to us all.
Here's to the beauty of Montana. Cheers!
Sideline Observer says that he can't move out of moms basement or live in a $5m home, not because of bad credit or bad real estate investments, but because decisions made by the über-rich have affected his carpentry (insert any number of manual labor jobs) business.
Once again, no accountability. Maybe you live hand to mouth out of mom's basement because YOU chose that career. YOU decided not to get an education. YOU decided to live that lifestyle. Maybe too much weed, or too many dead shows, or maybe the anti-establishment you fostered living at such a high altitude?
By mochsie, 5-18-09
Most of the motley crew out there can probably out-(hot tub)ski the elites anyway! OPEN IT UP. Let the Montana folk that love the (hot tub) mountain offer up their respect. I'll bet the (hot tub)mountain is yearning for it after being "loved" by Blixseth!
I got an idea Mooch, why don't you go buy your own (hot tub).
As for Sideline; no economic situation is improved by removing money from exchange. Except communism as taught in American institutions of higher learning. In the real world, people with money, pay people that know what they are doing, to do things they can't or don't want to. Build houses, build furniture, take care of the place and the like. Those people use the money to buy food, pay their mortgage, upgrade their vehicles and move their looser kids out the basement.
I'll stand for Sideline Observer.
From "Educator"? Possibly Blixseth's high school teacher, which is the extent of his education outside what he learned selling snake oil.
"No one of Consequence?" I ski uphill and soak in a horse trough.
People pay people to do other things besides build houses and be their servants= an economy that worked well enough before deregulation and the housing bubble. We pay people to grow our wheat and grind our flour. We pay our government to protect and steward our lands. We pay for things we CAN'T do for ourselves, but in Montana, we can do most of it by ourselves, and prefer to. It may not make enough money to "get out of the basement", but I'll bet if Sideline's mom needs help, he'll be right there to lend a hand.
It ain't all about lots of money. It's about livin' with honor. The folks with money think they deserve respect because of it. Some realize that it only happens on the backs of others, and pay their due. For many, it is hard for them to come to terms with what they owe. This YC story, a case in point.
Oh, the irony.
Dear Educator,
I am a female ivy league graduate, but I chose to ... wait for it ... become an elementary teacher in a blue collar town. I take full responsibility for that crazy choice.
Along with falling in love with, and choosing to legally marry, a carpenter. Wow, what a radical I am.
I grew up in Greenwich, Connecticut. I could tap daddy for a house in southern Montana, but I'd rather earn it myself.
I love to ski, but I haven't gotten high in over 25 years.
I harbor no delusions that there is "need" for the wealthy. I just don't want to hear them crying in their lattes about how they had to let their personal assistant go and now they can't figure out their blackberry.
This battle has been all about ego. I would have suggested the judge telling both sides to just whip 'em out, he'll get a ruler and the biggest d**k wins.
Maybe he did.
Sideline, you should be happy with the current state of affairs. You say you didn't overextend to buy a house, you didn't max out your credit cards, and you live in your mother's basement with your husband. You sound like a thrifty saver. If that's the case, you now have the opportunity to purchase a home for your family with all of the money you've saved at 50% of the price it would have cost 3 years ago, at the lowest mortgage rates seen in 60+ years (thanks to the stupidity of wall street bankers and AIG being unable to backstop its credit default swaps). You now have one of the best opportunities in generations to invest in your family and your future. America is still the greatest land of opportunity.
Comment By "No one of consequence"., 5-21-09By sidelineobserver, 5-21-09
"I harbor no delusions that there is "need" for the wealthy. I just don't want to hear them crying in their lattes about how they had to let their personal assistant go and now they can't figure out their blackberry."
Just as I thought. Learned economic theory at a university in the states. Also a teacher and undoubtedly a member of the teachers union and moveon.org. Just taking a stab at your religious (the above quote indicates “a dogmatic belief that is exempt from rational discussion” which is my favorite definition of religion) and political indoctrination. A Sam Byrne or a Bill Gates didn't get where they are by having someone else keep track of what balls are in the air or running their crackberry.
As someone that bargains for a dipper from the public trough, try to empathize with the truck drivers, pipe fitters, landscapers, roofers, rockers, framers, etc, etc, who have to work for a leaving.
The Club infused more money into this part of the world then anything short of building and staffing an air base with a Peacekeeper missile wing. The people that earned that money used it for everything from food and clothes (which I’m fairly sure they didn’t all make themselves) to movies, dinners out and coffee huts. The Club goes away and all those people start getting hurt. The Judge understood that and refused to allow it to happen. Only a Leninist would consider putting 5000 some odd people out of a job, for a dogmatic belief.
I can honestly say that I don’t care if someone made their dough from baseball, software, music, the lottery or backstabbing 12 people on an island. How you treat people when you can’t be censured for acting badly is what I go by. Your condescension and posturing is much worse that anything I’ve ever heard of from 99 percent of the members and managers at the Club.
Oh brother. Leninism always comes out as an excuse of people who want to do what ever they want at the public expense.
I'm not buying that donkey.
No one,
Wrong, I learned no economic theory at university. In fact, one of my first thoughts upon arrival there was that I had nothing in common with those liberal whiners. What I know I learned from my father, who worked his way through college to become very happily situated financially. No hand outs given to him, no hand outs given to me, except one: college. He is extremely proud of me for what I have done with my education. Growing up poor, it always bothered him that people associate lack of money with lack of intelligence.
I'm not a member of any union, nor would I want to be.
Don't know what moveon.org is, but I recall it had something to do with Dean when he was running for president.
I have no religious beliefs. Religion is for people who are frightened by the unknown.
I don't believe everyone gets a trophy either.
Don't care for Lenin, or Lennon. It's easy to say everyone should have their fair share when you have plenty.
When you work for your money, you don't appreciate anyone who's on the dole.
And I think you mean "work for a living", not "work for a leaving."
I'm happy to hear so many will have employment now. I hope they also have housing, perhaps even something nicer than 6 people crammed into a 2-bedroom. And that they can live in Big Sky, and not take the daily drive through the canyon of death, that current locals would like their highschool children to no longer have to take.
Former YCer,
You are right. I have been saving and planning. And I am patiently waiting it out in the basement while the bank decides whether it will let go of it's subsidized funds to allow me to buy a 50 acre organic farm. A ski home would be wonderful, but a home powered by solar and wind that produces food for my family and others (via sales and giving it to food banks) seemed a better choice.
Also, by "on the dole" I meant those that abuse the system, not the many, many, now that truly need it.
Been following all of the YC story and the comments...
But just wondering what people think that this means for the future of Big Sky, Spanish Peaks and Moonlight?
Just Wondering,
all will face challenges over the near to mid term. Leverage, combined with depreciating assets is hitting everyone's balance sheets. Expect no construction and shoestring operating budgets.
Sideline, good luck with that organic farm. Let me know when you begin production, I'd love some organic veggies!
I'm checkin out of the philosophizing on who's moral, who's right who's holy, who's liberal, who's "green", who's salary is holier than those that work at YC and all the other BS and goin skiin in the Beartooths with the kids. Have a great weekend everyone, I'm thankful for MT and that I can afford to live and play here in this moment and time with my family and friends....Adios laptop!!
Comment By storymilldawg, 5-21-09Mochsie:
Me neither.
The socialism/communism card is a predictable dart to throw at arguments for some ethical accountability in business. Apparently, free enterprise can't police itself due to human nature. So it needs governmental restraint. Sad fact of life.
storymilldawg is 100% capitalist, believes in the free market, property rights, and freedom of everything. Believe me, I worry every day about TARPs and govt ownership/nationalization of banks and major industries in this country.
But how about capitialist economics married to some basic moral premise and social responsibility? We have gotten way out over our ski tips as a society with self-interest and a sense of entitlement---at both ends of the income spectrum. To make this thing work, this country and our system surviving ANOTHER 250 years, we better get our act together.
It's disturbing to think that someone would actually scorn an individual's choice or predisposition to become a skilled carpenter, a drywaller, or even to toil as a laborer to put food on the table is any less noble than a software magnate or venture capitalist. I admire the sidelineobservers of the world that make conscious choices based on values that nurture the soul.
Agree with GC. Time for a great Memorial Day weekend. But I won't forget to quietly reflect on the sacrifice of those that gave it all for our way of life since the Revolution.
JW: This was over the top is it not on your part?
Shady deals put a ritzy Montana ski resort at risk. Then along came a common-sense judge.
by Jonathan Weber
Greed, Bankruptcy, and the Super Rich
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A private ski resort created by a timber baron in the rugged mountains of Montana would hardly seem to be a global bellwether for anything, except perhaps the evolving preferences of the very rich.
Yet the dramatic bankruptcy of the Yellowstone Club, the events that precipitated it, and the way it has been resolved show with unusual clarity the good, bad, and ugly of our current economic predicament. And the club’s future will be a leading indicator of the economic zeitgeist in the age of Obama.
Let’s start with the bad. In 2005, investment bank Credit Suisse was aggressively peddling resort loans, offering developers the opportunity to line their own pockets with the proceeds and offering institutional investors high-yield loan products whose risks were vastly underestimated.
Tim Blixseth, founder and dominant shareholder of the Yellowstone Club, was among the many who found the money irresistible. First he was going to take $150 million. Take a little more, urged the investment bank. Hell, take a lot more. And he did, finally closing on a $375 million loan, and, as explicitly permitted in the loan agreement, immediately transferring $209 million of it to his personal accounts.
When he and Jeff Barcy, the lead Credit Suisse banker, couldn’t agree on the fee, they flipped a coin. (Blixseth won, and Barcy got 2 percent instead of 3 percent.) Appraisals? Cash-flow projections? The ability of the borrower to re-pay? Ah, not to worry, these small details didn’t require much attention, because Credit Suisse didn’t have any money at risk anyway. The loan would be packaged and sold as part of so-called collateralized loan obligations, putting possible future problems on the shoulders of institutional investors like hedge funds and pension funds.
Credit Suisse did more than half-a-dozen resort deals like this, totaling close to $3 billion. How many other loans of this nature were made between 2002 and 2006, by most of the biggest names in banking? (Answer: a lot.)
Now we get to the ugly: The club had minority shareholders, including cycling great Greg LeMond, who thought they should get a share of the windfall. They sued the club and Blixseth, who finally settled for $38 million (though the judgment was never fully paid).
Blixseth, always looking for ways to expand his reach, hatched a new plan to lure the über-rich. Yellowstone Club World would offer elaborate vacation timeshares at exotic overseas properties, including castles and private islands bought with the Credit Suisse loan proceeds. But that plan quickly disintegrated, leaving Blixweth with a pile of expensive (and soon all but unsellable) assets.
By 2007, the club was facing serious cash flow problems, stemming from the heavy debt service on the Credit Suisse loan, profligate spending, and erratic management. Blixseth decided to sell the property, but the deal fell through. Tim and Edra Blixseth, meanwhile, were getting a divorce. They fought it out in court even as they continued to spend lavishly—seemingly oblivious to that fact that their empire was on the brink of collapse. Edra got the club in the divorce, and with it the huge debt load.
When the real estate meltdown hit, bankruptcy was only a matter of time, and a Chapter 11 filing came last November.
Credit Suisse, still the agent for the outstanding $310 million on the loan, responded by calling the lawyers. The Yellowstone Club bankruptcy was an evil conspiracy, argued the men from Skadden Arps, a plot by Edra Blixseth and Sam Byrne (the private equity investor who had tried to buy the club in early 2008). And besides, they argued, we’re the first-lien holder! We have our rights! Don’t stand in our way or we will lawyer you to the death!
But then, surprisingly, came the good, mainly in the form of an unassuming Montana bankruptcy judge named Ralph Kirscher. When Credit Suisse floated an interim funding plan that would involve “mothballing” the club—and thus throwing hundreds out of work and diminishing the chances of the tradesmen getting paid—Kirscher rejected it.
When the club’s Unsecured Creditors Committee sued Credit Suisse for “fraudulent transfer” on the loan—a move most lawyers viewed as risky bordering on reckless—the judge all but dared the parties to take it to trial. Credit Suisse and Skadden took him up on it, and Tim Blixseth, an unnamed defendant in the original lawsuit, filed his own legal action against the creditors and the club.
The trial was quite a spectacle. Under Kirscher’s firm hand, the bankruptcy process compressed into weeks complex litigation that would normally take years. Kirscher, feeling pressure to make a decision and clear the way for an auction of the club, issued a partial ruling that minced no words about Credit Suisse’s behavior, blasting the bank for acting out of “naked greed” and making a “predatory” loan with total disregard for the consequences. He stripped Credit Suisse of its first lien position, a rare act in bankruptcy court.
Cleverly, though, Kirscher stopped short of voiding the loan entirely, and so Credit Suisse retained the right to use the outstanding debt as part of a bid for the club at auction. Sam Byrne and his firm, CrossHarbor Capital, already owned a lot of property at the club and had provided interim financing for the bankruptcy; they were the only other bidder. Finally, Credit Suisse agreed to settle (for an $80 million note and some other considerations), and Byrne will buy the Yellowstone Club for $115 million.
The settlement calls for Kirscher to take back all those mean things he said about the bank’s behavior. But the unsecured creditors will get their money. The big guys with the secured position lose almost almost everything, and the little guys get paid in full. How often does that happen in bankruptcy court?
Note to bankruptcy judges around the country: There can be rough justice in this tidal-wave of toxic asset workouts, even if you have to stretch the precedents a little.
The question now, though, for both the big guys (Sam Byrne and CrossHarbor Capital, and their operating partner Discovery Land Co.) and the little guys (the vendors and contractors and waitresses and lift operators of Big Sky) is whether there is a future in the ultra-high-end resort economy.
The rich will always be with us, for sure, but in what quantities? To what extent will the contraction of the financial services industry, and the more progressive tax policies of the Obama Administration, diminish the pool of people who are able or willing to spend $5 million on a ski house at the Yellowstone Club?
In short, does the financial crisis represent a mere steeper-than-usual turn of the business cycle or a more fundamental structural reset?
The answer to that question will soon be clearly visible in spectacular mountains of southwest Montana.
Jonathan Weber is the founder, publisher, and CEO of New West, a media company covering life and business in the Rocky Mountain West.
A found a Poem fitting for the new owner which I wish to share in an attempt to repair/
The weed of corporate greed.
The corporate skyrise rising up
The tallest, widest takes the cup
The owners filled with vanity
They raise it up for all to see
To show their worth through cement blocks
All piled up they touch their cocks
They laugh they jeer they brag its sad
Their pride has surely sent them mad
While many live on little food
Too innocent to dare intrude
On selfways ways and selfish men
No golden goose its just a hen
The eggs are foul the owners too
The chickens own not free for you
The free range eggs they truly are
The best ones you can buy by far
Their money made our money lost
We celebrate this awful cost
The moneys gone what happens next
More money made to feed this pest
Lets spray the bugs out of control
Lets share the wealth, the drinking bowl
If we leave some without a drink
It's death we give, their on the brink
Those left without will always say
We must stand and fight for a better way
And so it is we guarantee
They'll always be catastrophe
As long as selfish men do lead
They'll tie us down and make us bleed
Collect the blood and drink it down
They'll kill us all without a sound
The axe held high in hands so tight
A vicious grin on jaws that bite
They rip and tear whatever flesh
Obscuring truth with rows of mesh
As light does shine across the skies
The corpses lay covered in flies
Now moneys such a useless thing
Can't buy back life, now feel the sting
The money lost, the money paid
It's all in debt that can't be weighed
All things it buys all things it owns
It takes the flesh leaves us the bones
The corporate man thinks he owns much
Lifes mysteries he'll never touch
The many things his cash can't buy
These things are mine, for these I'de die
Author/ Andrew Scrivener
Oh bh. You copy and paste like there's no tomorrow. What exactly is your point? You want a gravy train to ride and yours left town headed for Brokeville. What can you do now but act desparate??? Didn't you already have a deal with WeeJohnny about a bet you lost. You don't pay up just like someone else we know. According to you, Satan has control of yc now and it's all downhill from here. Love the speculation from some of you. Lots of experts here and I can't wait to see who is correct. The club has come a long way with a wannabee billionaire at the helm. Imagine how good it's going to get with an actual company that knows how to run a business. Love it or hate it is up to you. I can live without all the development but the community is in bad shape without jobs. YC will provide because there are lots of folks that it appeals to. It doesn't appeal to some on here because you can't afford it. If you are going to curse anyone that works at yc then please explain what you do for a living so we can trash your way of life. It's only fair.
Keep up the desparation bh because it is hilarious. I'd rather you and your aliases be banished from the internet but occasionally your desparation makes me happy. If you keep your identity hidden you can still apply for jobs at yc or sr and hope to someday ride the gravy train again. It's up to you.
You remind me of Granny in the Beverly Hill Billies Good one nancy you make me laugh as well
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