Yellowstone Luxury Residence Club – Update

Yellowstone - The Drama Continues

The continuing saga of the Yellowstone luxury residence club seems to be coming to an end. Or does it? Excuse me if I get a little confused, but the convoluted goings-on are better than any soap opera. A quick recap is in order as we have been following this one for some time and it has been getting more and more messy as time went on.

The Yellowstone club filed for bankruptcy in November last year, after failing to pay the final installment of a 39.5 million dollar settlement to Greg Lemond after he successfully sued the club’s owner, Timothy Blixseth, for “borrowing” 200 million dollars of the club’s money and going on an “orgy of spending,”

Later on in that month, Yellowstone secured another 4.5 million dollar loan to tide them through what was expected to be a good winter season. At this point in time, the main lender with a lien on the property was Credit Suisse, who had lent the club 343 million (200 of which disappeared or was “borrowed”).

The season turned out to be not so good, so, back to court and Yellowstone were permitted to borrow another 20 million dollars in January this year. At the time, Credit Suisse attempted to block the loan as it would mean replacing them as primary charge holder, but the judge in question happened to be an expert on valuing European property and allowed Mrs. Blixseth to secure Credit Suisse’s first charge with a chateau in France instead.

The lenders this time were a company called Cross Harbor capital Partners. Cross Harbor had previously lent Mrs. Blixeth, now divorced from Mr. Blixseth 35 million dollars to fund the purchase of another property in Palm Springs during the divorce. Did I not mention the divorce? Oh yes – Mr accused Mrs and vice versa of taking the money, but both them denied later allegations. Which is where we had so far followed the drama.

The club is now to be sold at auction next month and the fight over the carcass begins.

Cross Harbor Capital have already opened the bidding at 100 million, but Mr Blixeth has declared an interest and implied he intends to up the ante even before the auction begins. Apparently Blixeth said, “What’s on the table currently isn’t a real offer. The structure of the offer is bogus and I’m sure there will be much better offers before it’s over.”

Whether Mrs Blixeth enters the fray remains to be seen, but I understand there are a number of other interested parties, including a number of resident owners and Credit Suisse. Whatever outcome, there are obviously a few hurdles to overcome first, not least of which is valuing the property.

Credit Suisse are understandably upset at the current situation, having been ousted as main creditor by Cross Harbor whose offer will basically repay themselves should it be successful. The chateau in France is another unknown – seeing as the chateau has been up for sale for some time and is proving equally difficult to value in this market.

Credit Suisse will be reaching for their lawyers the moment an agreement is reached whatever the outcome, and I would think it will be a toss up as to who gets their lawsuit in the mail first – the judge who ordered their lien moved to a dilapidated chateau in France, the Blixeths, or Cross Harbor Capital.