[Vision2020] Lochsa Land Exchange and Bankruptcies

[Tom Hansen]

Courtesy of NewWest at:

http://tinyurl.com/NewWest-on-Blixseth-Bankruptcy

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Judge: Blixseth Responsible for Yellowstone Club’s Collapse

In a scathing decision released this week, Judge Ralph B. Kirscher rules
that Yellowstone Club founder Tim Blixseth's dealings caused the resort's
bankruptcy. But, lender Credit Suisse doesn't get off scot free either.

By Courtney Lowery

Federal Bankruptcy Judge Ralph B. Kirscher did not mince many words in a
decision released this week in the Yellowstone Club bankruptcy case: Tim
Blixseth’s “pattern of self-dealing,” is what ultimately led to the crash
of the exclusive Montana resort.

But, that doesn’t mean he’ll be on the hook for all the club’s debts.
Some, but not all. And, the club’s lender, Credit Suisse, who’s loan was
at the center of the long, brutal battle over the club’s finances, was no
saint either.

A large issue in the resort’s bankruptcy case has been the $375 million
loan from Credit Suisse that quickly evaporated after it closed. Not being
able to pay that loan back was the crux of the resort’s bankruptcy filing
in fall of 2008. The club has since emerged from bankruptcy under new
ownership.

Blixseth was accused of pocketing the Credit Suisse loan for private jets
and other lavish purchases and the bank was charged with being
irresponsible, flippant even, in making the loan. At one point during the
trial, it came out that the fees for the loan were worked out on a coin
toss. One of the club’s attorney’s Troy Greenfield put it this way last
spring: ““The corporate greed of Credit Suisse and Mr. Blixseth’s sense of
entitlement” created a toxic combination.

And in fact, Kirscher’s decision found that, “Contrary to Blixseth’s
arguments, the Credit Suisse loan was created so that resort owners, such
as Blixseth, could extract large distributions from their development
projects, without the need for any personal guarantee. Thus, the overall
purpose of the loan was not for development of the Yellowstone Club, but
instead, the purpose was to permit Blixseth to take money out of the
Yellowstone Club and in fact, the record shows that very little, if any,
of the Credit Suisse loan proceeds were used to fund development and
construction at the Yellowstone Club.”

On Credit Suisse, Kirscher wrote: “In this case, Credit Suisse and the
Prepetition Lenders are just as a culpable as Blixseth,” wrote Kirscher.
He went on, “If Credit Suisse had wanted to go after Blixseth in the event
of a default, it should have included such provision in the Credit
Agreement. This it did not do
 Blixseth and Credit Suisse have done a lot
of finger pointing in this case, but in the end, their conduct prompted
Debtors’ bankruptcies.”

As for Blixseth’s claims that the bankruptcy was caused by early
litigation from Greg LeMond, the management of the club under his ex-wife
Edra or a fallen-through deal with Sam Byrne and CrossHarbor Capital,
Kirscher called hooey on all of them.

“Blixseth blames theDebtors’ downfall on the lawsuit filed by the LeMond
Plaintiffs, the alleged conspiracy between Edra and Byrne, and Byrne’s
failure to follow through with purchase of the Yellowstone Club in 2008.
Given the evidence, Blixseth’s arguments are without support,” he wrote.

Attorneys tell Matthew Brown of the Associated Press that Blixseth is
likely to have to pay up for $20-65 million of the club’s debt. The club’s
total debt still looming is estimated at more than $200 million.

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Memorandum of Decision filed on August 17, 2010

http://www.MoscowCares.com/Lochsa/Decision_BR_081710.pdf

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Tim Blixseth leaves federal court in Missoula last year.
(NewWest photo by Daniel Doherty)

http://tinyurl.com/Tim-Blixseth-2009

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"Oh, what a wicked web we weave . . . "

Seeya round town, Moscow.

Tom Hansen
Moscow, Idaho

"The Pessimist complains about the wind, the Optimist expects it to change
and the Realist adjusts his sails."

- Unknown