Judge Bangs Heads Together
Deal Seen Near in Yellowstone Club Bankruptcy
After many months of legal warfare, Sam Byrne and CrossHarbor Capital Partners appear poised to become the new owners of the Yellowstone Club.By Jonathan Weber , 5-16-09
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| Sam Byrne, principal of CrossHarbor Capital Parters and likely the new owner of the Yellowstone Club. | |
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A chaotic two-day auction of the bankrupt Yellowstone Club ended without formal resolution late Friday, but sources said a tentative settlement that would give control of the club to CrossHarbor Capital Partners has been reached.
Although parties including club founder Tim Blixseth and a group of club members had indicated their intention to take part in the auction, in the end only CrossHarbor and investment bank Credit Suisse made bids. Credit Suisse suffered a big setback earlier in the week when U.S. Bankruptcy Judge Ralph B. Kirscher ruled that the $375 million loan the bank brokered for the club in 2005 was “predatory” and erased the lenders’ priority claims, but the bank was able to muster a competitive bid that included $43 million in cash and a so-called “credit bid” component.
Much of the fighting over the last two days involved which of the two bids was actually superior. The Credit Suisse bid had a higher dollar amount than CrossHarbor’s long-standing “stalking horse” offer of $30 million in cash and a $70 million note, but the club and the committees representing creditors and members argued that Credit Suisse’s plan did not provide the club with enough working capital to ride out the real estate slump, and included too much debt at too high an interest rate. CrossHarbor had pledged $75 million in cash going forward.
Judge Kirscher was clearly frustrated with all parties and their insistence on fighting rather than working out a deal. He was repeatedly forced to intervene in the auction process, and at one point called CrossHarbor principal Sam Byrne and Credit Suisse representative Steve Yankauer into a private meeting in an effort to force a resolution.
If the two parties can finalize a settlement over the weekend, they will be back in court on Monday battling - together this time - to get the bankruptcy reorganization plan and sale approved. A number of parties, mostly members who have special claims, have objected to the plan, but approval is nonetheless likely if Credit Suisse and CrossHarbor are in agreement.
While the exact terms of the settlement were not clear Saturday morning, it will almost certainly involve full payment for all trade creditors and vendors; Kirscher made that a condition of Credit Suisse’s bid.
(Author’s note: This story, and many of our other Yellowstone Club stories, rely on anonymous sources, and I wanted to clarify our policy. We always prefer to have people on the record, but on a story like this most people refuse to be identified, for a variety of reasons. I have many sources for my information on Yellowstone Club, and in almost all cases (including this story) we will not publish based on unnamed sources unless we have at least three independent sources with direct knowledge of the situation.)
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Comments
The Judge has stated from day one that closing the Club is a non starter. CS has never, by word or action, implied their intention of doing anything else.
time will tell?
WSJ AND FORBES REPORT LIKE BLOOMBERG, CS WINS THE CLUB.
JW, why are you the only one reporting CH? by the way, insiders close to you said SHARKBAIT was actually Sam Byrne blogging. is this true?
By Steven Church May 15 (Bloomberg) -- Credit Suisse Group AG asked a judge to rule that it has won an auction for the Yellowstone Club, the bankrupt ski ...
Is this what you are talking about?
Credit Suisse looks to Gets The Yellowstone Club
Kerry A. Dolan, 05.16.09, 1:46 PM ET
The words "Judge Kirscher" and "approved CS's bid" in the same sentence.
Why?...it doesn't matter if a smokescreen is gray or brown. He's just muddying the water in vain attempt to protect master Tim's convenient exit.
Subservient Blockhead only supports the Credit Suisse bid as it reduces Tim Blixseth's exposure. If Cross Harbor wins, Credit Suisse et al sick Blockhead's master, Tim Blixseth.
the facts are that SB/CH have never had trouble raising the money to execute on the sale of the club. It was dear Mr. B who refused to complete the diligence required on multiple occassions.
whether it is CS or CH, what matters is that someone can run the club well.
btw- buildling housing on spec/debt is what developers do - don't tell me you think that CH is the only builder using construction loans!
You all seem to be smelling your own stuff! CH / Sb are nothing more than dressed up wallstreeters who steal with a Pen. I agree, who cares who has the club at this stage as CS is already lodged an appea and lawsuits awaiting and I am sure TB will sue EB and SB the moment the dust settles. The only thing which comes with justice is seeing EB and SB wearing orange jump suits. All of you laugh but its right around the corner. Hey Kitty, do you know what the mortgage is from SB over Sunrise Ridge? Seems JW has lied about saying its 35m and oh yeah some internal loan (other peoples money---still a loan JW) but clearly we all know the truth and its over 100m! CH/SB are pulling out no stops to steal this club but the Judge has already stated CS is the best offer. Rubber stamp in the morning and then we bar-b-que and have a dunk tank. Invite SB AKA Sharkbait andd we can dunk his butt all the way off the mountain with Nancy sniffing all the way down to bigsky.
Also to clarify, in case Blockhead has succeeded in confusing anyone: the Judge never said he thought the CS bid is better, he only ruled that it was a qualified bid. If you want to know what's actual going on re the auction proceedings, please refer to my coverage including the story above.
At what point does Blockhead become Natachka?
How many people are you going to accuse of being sharkbait?
I assume from your planning of a victory party a the T4 that you are here in Montana...It is a stunning day out there! Do you really have nother better to do that sit online all day and post your mean blogs? (before you get the chance to jump on me for the same, I am home with a sick child and have only logged on once).
You have made some great points in your posts, but you hostile tone indicates that you either have some great stake in TB and/or CS winning or that you are in dire needs of medication.
Call a friend and spend the rest of your day enjoying life.
I actually have no sympathy for the wealthy he screwed in this deal. If you don't do your homework, you flunk the course. They have flunked, and are now trying to get the grade erased and a new start. There is a valuable lesson here. You can trust, but you do have to validate, do due diligence, your homework.
I have to go now. I just watched Obama at Notre Dame, and then this, and all of the sudden, the theme from Paul Newman's movie The Sting is running through my head. Honky-tonk piano, for a honky-tonk deal gone sour in a beautiful part of the world. He can't take the beauty away. He can't take the snow. He can't take the community of fine people. But the longer he is around your end of the world, the more stuff like this that will happen. He can't help himself. It is who he is. And there goes that music again!!!!
They say that people love a good scandal; YC and its
founders, including all the other key players, certainly delivered the goods.
You are so right on the mark. The public image cultivated by the Blixseths was so different than the truth. A lot of it was just spin and lip service with ulterior motives.
I'm with you, it's so baffling to ponder why these types of people operate the way they do, and have no moral compunction about shafting honest, hard-working people. They have enough money in many cases to live multiple lifetimes, and the impact on their lifestyle and net worth of acting honorably would be nil. Yet somehow they rationalize this behavior as "just business."
I personally think the YC type business model has seen its day and there is a sea change in values that will make the demographic for consumption of this type of product even shallower than it already is. Conspicuous consumption (even disguised as something different (e.g. a YC "we're just folks" mission statement) has gotten a taint.
Yes, after being mired in all of the legalities and greediness, we can focus on positives. That would include the club creating jobs, the construction industry that will benefit greatly from a YC revitalization and the Big Sky and Bozeman communities that will get the benefit of member and employee spending.
Thank God for CH and Sam- they had the guts to put up the bankruptcy financing and are now seeing their business deal through that will benefit us all!
operate under the same guidelines as when it was initially
established. It was a concept that was taken to the extremes
by the Blixseths. YC may or may not continue to operate under
such exclusive parameters as in the past. We are all experiencing a sea change or paradigm shift if you will, as a result of the "shocked" global economy. True, there will always be those with tremendous wealth; however, if you are one of the elite then you surely must know that many fortunes have diminished over the last year and many others have lost sizable amounts of their net worth. In the final analysis, the YC may have to surrender its ultra elite status to some degree to remain profitable and solvent.
I don't mean to dampen people's expectations for a miracle that will infuse money and opportunity into the local market, but that's how I see it and a lot of resort analysts and capital investment funds sorta see the same trend.
But, I hope it comes true for ya, and as with all things, time will tell.
It will be interesting to see what happens, but I wouldn't be surprised at all if some families cull their multiple vacation homes and the YC house is dropped.
We have witnessed the most greedy, heady and credit loving period in history and still the ultra rich club was two thirds under subscribed. There also was no negative publicity about the club like there is now. You look to 350 memberships...I see 500 available memberships being entirely subsidized by current members fees.
Whoever wins the auction has to prove they can operate the club for 2+ years with zero sales so the judge has no confidence in sales at all. The club's operating projections for the next 2 years are truly scary and only red.
The Yellowstone Club is a relic of a greedy lustful era and the poster child of high-end sub-prime. I think it may exist in some form or another but member fees will need to triple just to the operate chair lifts. It will never be the same, which is probably a good thing. Being Tim and Edra Blixseth free at least will be a start.
I think that will be gone. I think staff to member ratios will need to more than half...either that or annual member fees need to double+...Blixseth was pyramid trading using the large new member fees that have now evaporated. Left trading on annual fees alone the club is simply unviable, I think even if fully subscribed.
Don't worry, even I think a return back to reality actually makes it more attractive, but I think you need to drop this 'ultra-exclusive' talk as this club is exclusive in only one respect...people duped by Tim Blixseth. (discerning people need not apply?)
My family and I like almost every employee we have met. They are welcoming and friendly. Otghers feel the same way and that is why the membership has been very strong and vocal about not having a wholesale change of employees. Thanks!
You think I am jib and jab which is true but with facts, something you can do. sorry for you. did you get the mortgage figures of SR yet? Thought not. duck and dive you CH supporters! today could be the day. JH, sailing is looking better for you. Maybe you buy out the Freedom of Spirit which is for sale correct? How funny isnt that! Times are tuff and going to get tuffer! Blokhead lives and Blockhead will return.
Your screen name is becoming more and more a reality
Update of today's news story coming shortly.
http://www.newwest.net/topic/article/crossharbor_wins_battle_for_yellowstone_club/C35/L35/
Gotta keep those lovin good vibrations happening with you...