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The Yellowstone Club Proving to Be One of the Largest and
 Most Complex Bankruptcies in Montana History
By Jan Falstad, Billings Gazette, Mont.McClatchy-Tribune Regional News

August 20, 2009 - This time, the checks really are in the mail.

Billings bankruptcy attorney James "Andy" Patten spent an hour Wednesday morning signing about 800 checks totaling $2.5 million and mailing them to creditors owed less than $5,000 by the Yellowstone Club, a resort for millionaires near Big Sky.

"Everybody who has provided goods and services to the Yellowstone Club is getting paid in full, unless there is a glitch with their claim," Patten said.

U.S. Bankruptcy Judge Ralph Kirscher appointed Patten to disperse funds in what is one of the largest and complex bankruptcies in Montana history.

However, some workers owed money by the Yellowstone Club, and the country's largest tax collector, will have to wait a few days.

"The paperwork has to be right. For example, we're not sending the IRS a check today because the amount we are showing is different than their claims, so we have to get that straightened out," Patten said.

Some glitches also happened with wage claims, which total another $300,000 to $400,000. The Yellowstone Club is preparing checks for past and current employees and Patten expects to sign and mail those payments as soon as he receives them.

Patten, of the law firm of Patten, Peterman, Bekkedahl & Green, opened a First Interstate Bank account to handle these bankruptcy funds. On July 17, when CrossHarbor Capital Partners of Boston paid $115 million for the 13,600-acre club in the Gallatin Valley, Patten deposited $9.5 million in the Billings bank.

CrossHarbor paid another $75 million in cash to keep the club operating and is investing another $10 million in the development that claims as members Microsoft billionaire Bill Gates and former Vice President Dan Quayle.

CrossHarbor managing partner Sam Byrne unsuccessfully offered more money last year for Yellowstone Club before its founders, Tim and Edra Blixseth, filed for bankruptcy in November.

Tim Blixseth started developing the private golf-and-ski resort in 1999. Last August, the couple divorced amid financial and legal disagreements and Edra Blixseth took over management of the club. But the resort couldn't avoid bankruptcy after its debts topped $400 million.

At bankruptcy hearings in Billings in May, Kirscher scolded Credit Suisse for "naked greed" for lending the Yellowstone Club $375 million, money the bank knew the club couldn't repay. Instead of spending the money on the resort, the Blixseths spent most of it buying jets and mansions in France and California.

Kirscher recently ordered Edra Blixseth to sell her homes, cars, art collection and other assets to pay her remaining debts of $357 million. She has appealed.

And last month, a Butte attorney representing creditors of another Blixseth venture, Yellowstone Club World, sued Edra Blixseth. This civil lawsuit accuses her of transferring $1.1 million in Club World funds two months before the original Yellowstone Club filed for bankruptcy protection.

Patten has $7.5 million left to pay other claims, including a small army of lawyers and professionals for their work during bankruptcy.

"The professional fees are $6 million for this latest round," Patten said.

The unsecured creditors are owed another $1.9 million.

The trust is trying to collect money from Tim Blixseth and from cyclist Greg LeMond, a three-time Tour de France winner and club member. LeMond was awarded $26 million last year after accusing the Blixseths of mismanaging Yellowstone Club funds.

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To see more of the Billings Gazette, or to subscribe to the newspaper, go to http://www.billingsgazette.com.

Copyright (c) 2009, Billings Gazette, Mont.

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