Judge seeks settlement talks in bankruptcy case of exclusive Montana resort for millionaires

Judge seeks settlement in Yellowstone club case

BILLINGS, Mont. — A U.S. bankruptcy judge has ordered three days of settlement talks in May for the tangle of legal claims arising from the bankruptcy of the ultra-exclusive Yellowstone Club.

Creditors want $286 million out of the resort’s high-flying founder, Tim Blixseth, who they say bankrolled a luxury real estate shopping binge with money he “stole” from the club. Blixseth claims the club was the victim of a conspiracy engineered by his former wife Edra, new club owner Sam Byrne and executives at the financial giant Credit Suisse.

The millionaires-only ski resort near Yellowstone National Park emerged from bankruptcy protection almost 10 months ago.

Credit Suisse arranged a $375 million loan to Blixseth in 2005 but is now trying to distance itself from the case. Senior U.S. Bankruptcy Judge John Peterson said in the order March 12 that he wants the firm to attend the settlement talks scheduled to start May 5 in Butte.

But Peterson is a mediator — not the presiding judge — in the case and he can’t force Credit Suisse to come to the talks. Credit Suisse spokesman Duncan King would not say if the firm plans to attend.

Peterson’s order noted that the talks would not delay rulings from U.S. Bankruptcy Judge Ralph Kirscher, who is overseeing many of the Yellowstone Club cases. Parties in the $286 million complaint against Tim Blixseth submitted their final legal briefs to Kirscher on Friday.

The creditors asked the judge to reject Blixseth’s claims that he worked hard to make the club profitable.

Within days of Blixseth giving up the club to his ex-wife during their 2008 divorce, he started transferring hundreds of millions of dollars in assets to a Las Vegas trust, Desert Ranch LLLP. Most of that luxury real estate and cash came into Blixseth’s hands through the Credit Suisse loan.

“Blixseth’s actions were not accidental,” creditors’ attorney Charles Hingle wrote about the creation of the trust. “They were the result of calculated steps to attempt to protect from creditor attack the hundreds of millions of dollars of assets he stole from the debtors (the Yellowstone Club).”

On Friday, Kirscher issued an order restricting Blixseth from removing assets from the trust.

Blixseth’s attorneys have continued to hammer at Credit Suisse, referring to the firm as “the party who chiefly created this mess in the first place.”

Last year, in an earlier phase of the Blixseth trial, Kirscher penalized Credit Suisse for making a questionable loan to the club that it knew could not be repaid. The move bumped Credit Suisse behind other creditors in the repayment queue.

Blixseth now points to the ruling as barring a judgment against him even if he does bear fault, which Blixseth denies.

“Montana has laws and case law which bar recovery between wrongdoers,” his attorneys wrote.