BILLINGS, Mont.—The owner of one of the world’s most exclusive resorts, the Yellowstone Club, has filed for personal bankruptcy protection.
Former billionaire Edra Blixseth took over the club with its private ski hill in the mountains of southwestern Montana last August, as part of her divorce from Tim Blixseth.
After seeking bankruptcy protection for the club in November, Edra Blixseth now says she is personally in debt for $500 million to $1 billion, according to documents filed in federal bankruptcy court in Montana.
The move caps a dramatic fall for Blixseth, who beginning in the late 1990s worked with her former husband to carve the ritzy club out of 13,600 acres in the Madison Mountains.
Just a few years ago, the club stood as a symbol of the nation’s monetary excesses. Members would buy homes for $10 million or more—in some cases only to be used for one or two weeks a year.
The club’s more than 300 members include such members of the elite as Bill Gates, former Vice President Dan Quayle and Los Angeles Dodgers owner Frank McCourt.
But a series of questionable loans taken out by the Blixseths beginning in 2005 set the resort up for financial disaster. When the real estate market turned sour and the spigot of new investment money from Wall Street was turned off, the club’s debts quickly grew to $433 million.
In a statement, Edra Blixseth blamed her decision to file for bankruptcy on difficulties she’s had trying to sell her non-club properties, including a castle in France listed for more than $60 million.
She also accused Tim Blixseth and his associates of running an “orchestrated campaign to discredit my good name” since she took control of the club.
“It is my firm belief that the only way to weather these relentless attacks was to seek the (bankruptcy) court’s protection and work to satisfy any and all claims against me,” she wrote in the statement.
The bankruptcy filing lists assets for Edra Blixseth of between $100 million and $500 million.
Tim Blixseth contends the club was in good financial shape when he turned it over to Edra as part of their divorce settlement. One of his attorneys, Michael Flynn, on Friday criticized what he described as Edra’s decision to seek a “prepackaged bankruptcy” for the club last November.
He said that “effectively killed the Yellowstone Club and ten years of blood, sweat and tears of Mr. Blixseth to build it.”
The type of bankruptcy Edra is seeking, known as Chapter 11, would allow her to shield her private residence in California from creditors, said her spokesman, Bill Keegan. That 240-acre estate in Rancho Mirage has a championship golf course, a main house and at least one guest house.
She also owns a multimillion-dollar golf resort in Scotland and the castle in France. Tim Blixseth’s holdings include an estate in Mexico and a private island in the Turks and Caicos that he has sought to sell for $75 million.
Edra Blixseth appears to have been pushed to seek bankruptcy protection by the mounting legal and financial pressures she has faced in recent weeks.
On Thursday, a Montana judge ordered her to pay just over $1 million to a Bozeman bank for defaulting on a loan made to an interior design company she owns.
And last month, a Colorado judge issued a warrant for her arrest after Blixseth failed to appear in court for a case in which she and her son, Matthew Crocker, owe $13 million to Western Capital Partners LLC.
The Western Capital loan was taken out for a real estate development that has since gone bust. Crocker has filed for Chapter 7 bankruptcy, in which his assets will be liquidated.
Once valued at more than $1 billion, the Yellowstone Club could bring in only a fraction of that amount at a bankruptcy auction expected in coming weeks.
Boston-based investment firm CrossHarbor Capital LLC has made an opening bid of $100 million. The firm, which specializes in distressed real estate, last year had sought to buy the club from Tim Blixseth for $470 million, but later withdrew the proposal.
Tim Blixseth’s attorney, Flynn, alleged Friday that CrossHarbor had conspired with Edra Blixseth to put the club into bankruptcy after the couple’s divorce. Flynn suggested that this had started the club down a path to financial turmoil.
“Had the Club sale to Cross Harbor gone through, there would be no bankruptcy proceedings,” he said.
CrossHarbor managing partner Sam Byrne called the allegation “completely and utterly absurd,” adding, “All we want is what’s best for the club.”
