The Yellowstone Club, an exclusive mountain retreat for the ultra-rich, said it filed for bankruptcy Monday after failing to secure new financing — underscoring that even the elite can't escape the country's current economic troubles.
Spokesman Bill Keegan said the club filed for Chapter 11 protection in federal bankruptcy court in Montana. The move came just two months after the club announced an ambitious expansion plan through a partnership with the Arizona-based Discovery Land Company.
The gated, millionaires-only club on 13,400 acres in Montana's Gallatin Mountains boasts a private ski hill and golf course. Opened in 1999, it counts former Vice President Dan Quayle and Microsoft co-founder Bill Gates among its 340 members.
In a statement to The Associated Press, the club said it had been unable to secure financing arrangements with its creditors and bondholders. It plans to reorganize its finances and emerge from bankruptcy "as soon as possible," the statement said.
"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 said.
Monday's bankruptcy filing marked the latest in a string of shake-ups at the club. Its billionaire founders, Tim and Edra Blixseth, recently divorced, and in August the club settled a lawsuit brought by club member and cycling superstar Greg LeMond for $39.5 million.
LeMond and several co-plaintiffs had accused Tim Blixseth of trying to buy out their minority stake in the club for less than its true value.
Expansion plans on hold
After emerging from her divorce with control of the club, Edra Blixseth in September laid out plans to build 450 more houses and condos and new amenities including a luxury spa, golf clubhouse, baseball field and more ski runs.
Those plans are on hold pending resolution of the club's financial woes.
Keegan says the club has financing in place for day-to-day operations and plans to be open for the ski season. The club's estimated 600 winter employees still have jobs, but Keegan said layoffs were possible "down the road."
The tony club first ran into financial trouble when Tim Blixseth sought to expand even as the real estate market turned south.
Its problems grew after the Blixseths allegedly diverted money meant for the club to their own use, according to court documents. At roughly the same time, Tim Blixseth went on a property-buying spree in a bid to take the club concept global, with an enterprise called Yellowstone Club World.
Chateau in France, golf in Scotland
Among his purchases were a chateau in France, a golf resort in Scotland, a villa in Mexico and an estate in the Caribbean.
Earlier this year, a deal to sell the club for a reported $455 million collapsed, leaving Tim and Edra Blixseth feuding over control of the enterprise. Since taking control, Edra Blixseth has moved to sell off some of the club's international properties to firm up the club's finances.
But Keegan said efforts to secure new financing stalled as credit markets tightened with the crisis gripping the nation's economy.
"The lending markets froze up so they could not structure a credit facility to their fashion," Keegan said. "They felt this was the best way to protect the members and protect the club and its future."