Judge denies $229M repayment of Credit Suisse’s Yellowstone Club loan, cites ‘greedy antics’By Matthew Brown, AP
Wednesday, September 8, 2010
Judge slams Credit Suisse’s ‘greedy antics’
BILLINGS, Mont. — A federal bankruptcy judge said he would not reward the “greedy antics” of financial giant Credit Suisse by ordering the repayment of $229 million on a loan it arranged for Montana’s exclusive Yellowstone Club.
Bankruptcy Judge Ralph Kirscher’s Tuesday order said Credit Suisse was complicit in the diversion of the 2005 loan for the personal use of club founder Tim Blixseth and his ex-wife, Edra Blixseth.
Failure to repay the loan eventually helped drive the resort to bankruptcy. The club emerged from bankruptcy when it was sold last year to CrossHarbor Capital Partners of Boston.
Kirscher said Tim Blixseth must pay more than $40 million to other creditors — far less than the $286 million he was alleged to owe in a lawsuit filed by creditors’ attorneys.
“(Tim) Blixseth and Credit Suisse were partners in the loan debacle and the court is not inclined to enter a judgment that would benefit either of the wrongdoers,” Kirscher wrote.
Attorneys representing club creditors — including Credit Suisse — filed an appeal with the Bankruptcy Appellate Panel for the Ninth Circuit. The firm is not a direct party to the case, and Credit Suisse spokesman Duncan King declined to comment.
Blixseth said Wednesday that the $40 million judgment was inflated by “bogus claims” and predicted the amount would eventually be reduced to just $3 million to $4 million.
He also said that federal authorities were investigating his ex-wife and others on fraud allegations stemming from events surrounding the bankruptcy. She denied the accusation.
“There is a major criminal investigation under way,” Tim Blixseth said. “There has been a conspiracy using the bankruptcy system in a fraudulent way.”
He declined to give more details except to say the investigation was focused on “Edra Blixseth and various other individuals connected with the Yellowstone Club bankruptcy and the purchase of the Yellowstone Club.”
Edra Blixseth took over the club near Big Sky after the couple’s divorce was finalized in August 2008. She arranged tens of millions of dollars in loans to prop up the faltering enterprise but filed for bankruptcy protection for the club just three months later.
Edra Blixseth declared personal bankruptcy last year.
She said Wednesday she was not aware of any investigation into her activities.
“I feel confident I did nothing wrong,” Edra Blixseth said. “It’s just more harassment from Tim who is unhappy about rulings that are coming out against him.”
Judge Kirscher has repeatedly rejected Tim Blixseth’s claims that the bankruptcy was the result of a deal between his ex-wife and CrossHarbor Capital.
Representatives of the FBI and the U.S. Attorney’s office are prohibited from talking about pending cases.
Tags: Billings, Montana, North America, Personal Bankruptcy, Personal Finance, United States