Exclusive millionaires club falls on hard times

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Nobody in Montana is laughing at the millionaires-only Yellowstone Club as it struggles to stay open after declaring bankruptcy. It’s more like smirking.

There’s just something inherently ironic about a club whose members include multibillionaire Bill Gates running out of cash and being unable to pay, for example, the $200 owed to the Butte Chamber of Commerce.

“I think most people in town are kind of gloating, you know what I mean?” said Lottie Ortman, a waitress at the Western Cafe in Bozeman, Mont., about an hour from the ultra-exclusive resort. “I mean, you have all these hundreds of millions of dollars in dues, and then you blow it all on Swiss chateaux and whatever.”

Attorneys and lenders for the Yellowstone Club managed late Wednesday night to broker a short-term financing deal in federal bankruptcy court that will keep the resort operating through the crucial ski season.

U.S. Bankruptcy Judge Ralph Kirscher gave the go-ahead for the club to borrow $20 million at 15 percent interest from CrossHarbor Capital of Boston, rejecting a competing offer from Credit Suisse.

Attorneys for Credit Suisse argued that CrossHarbor was attempting to take control of the club. CrossHarbor, a real estate investment company, had tried earlier to buy the club.

But the judge said he was more concerned about potential pitfalls with the Credit Suisse plan, such as a requirement for the club to sell off at least $5 million in golf-course lots in 60 days, which he described as unrealistic, according to the Montana Standard.

“Credit Suisse’s proposed 60-day sale would create enormous ill-will with the members,” Judge Kirscher said in his order. “And while the Yellowstone Club’s reputation has been somewhat tarnished by this bankruptcy and the events leading up to this bankruptcy, the magnitude of the stigma would go up exponentially if the Yellowstone Club turned out the lights.”

The club filed for bankruptcy Nov. 10, listing in court papers 700 creditors and debts of at least $399 million. A $4.5 million loan arranged earlier this month through Credit Suisse was only enough to keep the club operating for about three weeks as club members and creditors jostled for position.

Located on 13,400 acres in Montana’s Gallatin Mountains, the nine-year-old resort counts frequent-world’s-richest man Mr. Gates, Los Angeles Dodgers owner Frank McCourt and former Vice President Dan Quayle among its 340 members.

A group of owners, known as the Ad Hoc Committee of Yellowstone Club Members, issued a statement Thursday in support of the agreement. The group has raised questions about whether the club’s founders, Tim and Edra Blixseth, have diverted club money to fund their own opulent lifestyle.

The financial package “that keeps the club open and operating is in the best interests of all parties, particularly the local community and the nearly 1,000 dedicated employees of the Yellowstone Club,” said the committee’s attorney, Jonathan Alter.

During the two-day court hearing in Butte, several parties expressed concern over the impact of the club’s collapse on the local economy. Workers are especially needed during the winter to run the ski operation.

“There’s a lot of employees from here who work there in the wintertime - it’s an hour from here, but we’re the closest community to the club,” said David Smith, president of the Bozeman Chamber of Commerce.

The club also employs construction teams on its building projects. On the other hand, residents said Yellowstone Club members rarely come into town for shopping or restaurants.

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