Credit Suisse Prepares to Continue Legal Fight for Yellowstone Club
By Robert Struckman, 12-04-08
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Edra Blixseth will be deposed by Credit Suisse lawyers this Saturday in California as part of the ongoing legal battle over control of the debt-riddled and bankrupt Yellowstone Club near Bozeman.
In notices filed late Wednesday, Credit Suisse said it plans to depose Sam Byrne of CrossHarbor Capital Partners, the Boston-based hedge fund that won a struggle to fund the penniless club until the end of April, as well as the club’s professional managers and a representative of the leading member group.
Edra filed for Chapter 11 bankruptcy protection for the Yellowstone Club on Nov. 10, citing debts of more than $360 million. The club had no money and was on the brink of closure. The largest creditor is a collection of investors led by Credit Suisse, who are owed more than $307 million. Chapter 11 allows a business to remain open while reorganizing its debt.
Edra won control of the club in August after a bitter divorce with Tim Blixseth, the club’s founder, and the architect of its monumental debt. So far in the proceeding, Tim has been notably absent, although a lawyer representing him recently signed onto the case. When Edra took over the club, its finances were in shambles, its accounts virtually empty. Some news outlets have described the Yellowstone Club as the victim of the worldwide financial crunch, but at the bankruptcy hearings it seems the club was a financial train-wreck-in-progress years ago. Member deposits of more than $88 million, for instance, are gone, and one allegation in a previous lawsuit says Tim and Edra Blixseth funneled more than $200 million of the Credit Suisse loan to themselves as profit, spending it on private jets and California mansions.
As the party with the largest debt, Credit Suisse plays a primary role in the bankruptcy hearings and, until last week, stood first in line to get repaid when the club gets sold. One count of the total number of art galleries, food purveyors, contractors, builders and others owed money by the club came to 1,122. Those include Northwestern Energy, owed almost $247,000.
But Credit Suisse lost its leading position among the debtors when its investors balked at the prospect of funding the club through the winter, walking away on the morning of a bankruptcy hearing just days before the club would have again run out of money. Credit Suisse had provided the first operating loan of about $4.5 million in early November.
If CrossHarbor had not stepped forward with a $20 million loan of its own—which included a provision to move the company to the head of the line of creditors—Credit Suisse would have closed the club and sold all of its assets by January.
U.S. Bankruptcy Judge Ralph Kirscher sided with the CrossHarbor proposal because the club will likely be worth more as a going concern.
But Credit Suisse has indicated it doesn’t plan to roll over easily. Its lawyer, Mark Chehi of Skadden, Arps, made a formal objection. At the hearing Chehi had tried to build an argument that Sam Byrne of CrossHarbor had conspired with Edra Blixseth and the club’s managers and members to edge Credit Suisse out of the club’s financial picture.
But Judge Kirscher didn’t seem to see any merit in Chehi’s suggestions, at one point chiding him to quit repeatedly prodding one witness with the same question.
“I think he’s answered the question,” Kirscher said.
With the depositions, the Credit Suisse legal team seems to be positioning itself to ask its questions again. All the parties will reconvene in Montana next week on Dec. 11 for the next court hearing of the bankruptcy of the West’s preeminent playground-of-the-rich.
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Comments
Just another piece of the puzzle for you. Maybe we need a new cable channel reality TV show called " Big Sky".
Kudos to New West for continuing to make it's mark as a regional publication and news source by following and reporting on the important and interesting financial story. Many could learn much about bankruptcy law by following your reportage which is even-handed, complete, and in the best traditions of journalism. Stories unfold over time, and the best reporters keep readers up to date as this happens and as facts become available, which by their very nature are always 'limited.' Thanks for continuing to do your job so well. You never make mute points, or moot ones either for that matter.
So Timmy had a reporter at the Bozeman Chronicle who used to report every move Timmy wanted the world to know about. McMillion is his name. I haven't read anything by him on this subject in a while. Is Timmy not feeding him or did he find another story, and is working on the due diligence?
Appears we are not in the 'good' with NEW WEST. What amazes me is the fact you have knowledge and I have knowledge of the facts yet only our comments are deleted. It make no sense, why so many new papers and writers favour those which have created the mess. They believe we are attacking people but we are only highlighting facts which can be found with very little effort. NEW WEST, if you want to have a detailed file and you promise to do a fair reporting then I am more than happy to send you a large FED EX but it appears you are not practicing fair reporting nor was the BOZO Chronicle. Clearly you agree Scott M was a Tim boy and no longer at the paper. IF you favour CH, then tell your readers so we know your position but its not fair to delete accurate comments and debates. After all, your site has many hits because people flock to your site to read the blogs not the articles. Its become a source to find facts and for others to draw their own conclusions. For every 'Negative CH' their is a positive CH, for every negative TB there is a positive TB. It works both ways and maybe, just maybe you will realize this is good for your paper. Do not be pressured by lawyers from California to Boston threatening you to better control this blog site, in fact if they threaten you its because they do not like what is coming out in these Blogs. We are aware of three emails from Ch you have received but understand CH does not want these issues to come out and nor do others but its the only way to get to the truth. What is so wrong with this type of reporting. Long ago, before you became a writer, newspapers actually wrote with Freedom of Speech and now it appears they write only what sells advertising and pleasing of shareholders. Has TB called to sue you? I would assume not. One thing about TB is he is strong enough to take all of this and CH, well, lets face it, you want to jump into 'Pull Position' then be prepared to be discussed. Attacking a character is different unless the behaviour they are displaying is in the public domain already is it not? TB was a crafty salesman and full of shady deals. Is this a persona attack? No. Why, TB also made a lot of money and fooled everyone which is remarkable on how he pulled this scheme off. Bad person? Every reader can judge this fact. But the fact is money is missing, money shifted, investors scrambling for themselves to CYA, Jets, Cars, Lawyers, job losses, shifty loans, shift court practices, interference, wrongful lending practices, explosions, accounting irregularities, shady land deals, special deals on not paying fees, lending money to people whom they know cant repay to gain advantage over CS, TB escaping all of the fun in the end crash, yachts sold, more land swaps, more lawsuits. This is a writers dream story and yet NEW WEST you are unwilling to pick it up and run with it. There comes a time when you are responsible in your life and reporting what goes on in such scandals is it not? Lives have been ruined, in some cases into pieces, jobs lost, investors money lost, bond holders money lost and for what? Enron top brass either committed suicide or are in Prison, WorldCom, Bernie is too in Prison, Martha Stewart in jail for a little 200K insider trading and yet not crime in YC? Hard to believe. I have asked for a story on CH and yet somehow I do not think you wish to do such a story. CH is a great story on all fronts as they have been on this since Jan 07. WHY is that? YC is that great of a deal or is it a simple case of CYA. TB is where? CYA why else is his lawyers attending the court room hearings? Edra, poor Edra who fell for the trap of CH and TB. Does she get to keep her house in the end or does do the nasty and make her homeless? Come one, its easy to hit the delete button in life but the real hero of writing today searches for the answers and investigates. Clearly you must have a writer in house who can dedicate his time to write a feature article. Webber just got posted for his piece on tearing down CS in the Seattle Times, how impressive. Short for the WSJ, Forbes, CNN, and lets not forget, Blixseth was on Larry King Live during the Katrina days. Did you miss that TB did a random act of kindness on helping the lady in TENN. buy a new motor home and told her to buy what ever she wanted last week. makes you heart just melt, a whole 20K donation to this person. It was a nice gift but to go national with your PR firm really send the wrong message I think. You cant correct your mistakes for 20K. He never paid for the Roseburg football stadium nor other donations but received a lot of press. Lets stop deleting and start investigating CH, TB, and the others to get to the truth. CH needs to be front page if you support them.
Come to the Toxic article, i am being attacked and NEW WEST seems to think its normal for me to be attacked and and does not apply the same rules.
The unplowed ground for journalists in this deal is still in Oregon and Washington, and there is a good book, and some great journalism to be produced by the reporter who ferrets out the real TB and his life of con man shady deals and bad intentions from the git-go. He can't help himself. It is who he is. I do think he is just a lot smarter than most, but certainly more brazen and bold than any I have ever come across. Gee. That is just like a Wall Street investment banker, no? And they keep on going, with no moral regrets, no interest in anything but their bottom line. And their trail is littered with ruined lives.
New West, you need to write about how CH operates. You will find a path of destruction and under-handed behavior so that they maximize their profit regardless of the method! Why do you think that most members do not want him involved? They know his history do they not? Look, many of the Sunrise Ridge condos have water and construction problems because corners were cut to save money! Why did they install ice melt with such pitched roofs? Because of water and flashing problems and poor, cheap design. That is why! What does this say? At least the townhouses near Warren's place have true cold roofs. Good job Bert, but way to crowded and close to the lifts. Good deal on the property at 15 million when TB was in a pinch. Does TB have any interest in those projects? How is the GEO-TECH there?
NEW WEST, time to do some real reporting and fact finding to redeem yourself from the gutters of the special interest press. Wake up readers!