A Boo-boo at Yellowstone?

Bankruptcy filing at the luxury ski and golf private community is a tangled tale of losses, some of which relate to the financial crisis.
Stephen TaubNovember 11, 2008

Luxury establishments are anything but immune to a worsening financial crisis, of course. And the latest case in point may be the Yellowstone Club.

The private resort and ski and golf community — based in Big Sky, Mont., and adjacent to the national park that features Old Faithful and the famous Yellowstone bears — has filed for bankruptcy protection after failing to secure new financing. “We felt this step was necessary to address short-term liquidity constraints and preserve Yellowstone Club’s long-term future,” Yellowstone Club CEO Edra Blixseth told the Associated Press.

Just two months ago, the AP noted, the club had announced a major expansion plan through a partnership with the Arizona-based Discovery Land Company. Yellowstone Club had hoped to build 450 more houses and condos and new amenities, including a luxury spa, golf clubhouse, baseball field, and more ski runs.

The website of the club proclaims that “only a few discerning families will have the opportunity to become YC members.”

The financial downturn, however, is only the latest of a number of troubling developments for the club, according to the wire service, which noted that the club’s billionaire founders, Tim and Edra Blixseth, recently divorced. In August, Yellowstone Club settled for $39.5 million a lawsuit brought by cycling icon, and club member, Greg LeMond. According to the wire service, he and several other plaintiffs had accused Tim Blixseth of trying to buy out their minority stake in the club for less than its true value.

Citing court documents, the AP also said there were allegation that the club ran into financial trouble because Tim Blixseth tried to expand in the face of a deteriorating real estate market. Other allegations were made that the Blixseths had diverted money meant for the club to their own use.

The AP said that he had tried to sell the club for $455 million earlier this year, but the deal fell apart. Since the couple’s divorce, Edra Blixseth has tried to sell some of the club’s international properties, according to the report.

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