Billionaire accused of 'looting' posh Mont. resort
By MATTHEW BROWN - Associated Press Writer
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MISSOULA, Mont. — A federal bankruptcy judge on Wednesday delayed a civil trial on creditors' claims that the exclusive Yellowstone Club in Montana was looted by its former owner.
In the years before the mountain resort he founded spiraled into bankruptcy, Tim Blixseth lived a jet-setting life of luxury, bankrolled largely by a $375 million loan made to the club through Credit Suisse.
After transferring the bulk of that 2005 loan to his private accounts, Blixseth and his former wife, Edra, bought plush airplanes, sprawling estates in France, Mexico and Scotland and a private island in the Caribbean.
But with the club now more than $400 million in debt, its creditors say the loan should never have been diverted. The club, which has a private ski hill on 13,600 acres, counts former Vice President Dan Quayle and Microsoft's Bill Gates among its more than 300 members.
The creditors are seeking to have the loan declared illegal and for Blixseth to return the money he received. They also want Credit Suisse to return to the club $146.4 million in principal and interest already paid.
"Enticed by the riches available from Credit Suisse, the Blixseths chose to breach their fiduciary duties (and) abandon the Yellowstone Club," creditors' attorney Thomas Beckett wrote in documents filed with the court.
In another brief, Beckett described Tim Blixseth as "looting" the club prior to transferring control to Edra Blixseth as part of their divorce settlement last August. The pair built the club in the late 1990s on former U.S. Forest Service land near Yellowstone National Park.
As the trial opened Wednesday, Blixseth's attorney asked for his client's case to be heard at a later date and separated from the creditors' claims against Credit Suisse. Attorney Joseph Grant said hundreds of thousands of pages of documents in the case were made available only Tuesday night, hobbling Blixseth's defense.
"We're not talking about hardship. We're talking about a fundamental denial of due process," Grant told the court.
U.S. Bankruptcy Judge Ralph Kirscher said Blixseth would be given another week to prepare, but would not receive a separate trial as his attorneys requested. He said pushing ahead with a trial immediately could have left the case open to appeals.
"It is with great reservation that I do this," the judge said. "I feel I have no choice."
The Yellowstone Club filed for bankruptcy protection in November. Its members and creditors blame Blixseth and Credit Suisse, a Swiss investment bank that received $7.4 million for arranging the loan.
In recent years, the Swiss investment bank packaged more than $2 billion in loans to at least six luxury resorts now in financial trouble. Some of those deals - including the Yellowstone Club's - were marketed as a way for resort owners to extract massive and early "profit dividends" before the developments were completed.
After the real estate market collapse, the resorts were unable to keep selling property to cover the loans.
Tim Blixseth's attorneys contend the money he took from the loans was deserved, and that the bankruptcy filing was spurred by economic forces outside his control.
Credit Suisse contends there was nothing improper about the deal and that it was approved by numerous attorneys. That included Tim Blixseth's attorney Steven Brown, who now sits on the creditors' committee that is suing Credit Suisse.
The club is up for auction next month, with a starting minimum bid of $100 million. Yellowstone Club attorney Andy Patten said Wednesday that the continuance in the civil lawsuit would not delay the auction.
Tim Blixseth intends to participate in the auction, and has prepared a bid to regain control of the club, said Michael Flynn, another of his attorneys.
If the creditors prevail in their lawsuit, any sale proceeds would go to the contractors, utilities, banks, employees and others owed between $25 million and $50 million by the club. Credit Suisse would have to wrangle directly with the Blixseths to reclaim the $307 million it is still owed.
Whether Credit Suisse could get its money back from the Blixseths is uncertain. Edra Blixseth filed for personal bankruptcy last month, while Tim Blixseth has been trying to unload his island in the Turks and Caicos for $75 million.
Friday, April 24, 2009
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I am a Roseburg,oregon native.Only a few years older than Tim,I went to school with his sisters. I am very familiar with the timber industry in Oregon."Tim"-ber baron my foot! He never owned a parcel of land but made his millions on the backs of unsuspecting elderly land owners who were innocently trusting him for a little retirement fund from their trees! Ask any one in Douglas county ,Or. about Tim Blixeth......they would like to hang him or tar and feather him in true western style! He should never show up there again or it might happen.ReplyDelete
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