Yellowstone Club founder Tim Blixseth stayed on the attack Thursday as lawyers and accountants debated over who knew what — and when — during the financial collapse of the ultra-exclusive alpine getaway for the rich and famous.
Nearly $300 million of Blixseth's personal fortune is at stake — just a piece of one of the biggest bankruptcy cases ever to roll through Montana, as the best experts money can buy battled in a packed Missoula bankruptcy court.
Banking giant Credit Suisse is accused of pushing a $375 million loan the club had no hope of repaying while "lining its pockets" with fees. Creditors said Blixseth is guilty of "looting" $286 million of it for his own use, even as he knew bankruptcy loomed.
There didn't appear too be many innocent parties left digging through the debris and dirty laundry of the former billion-dollar empire's financial ashes.
Blixseth came from the timber business to build a real estate empire that stretched around the world and catered to the likes of Microsoft Corp. co-founder Bill Gates and former Vice President Dan Quayle.
He thrashed "Predator Suisse" and the club's new owners for picking on him with legal tricks. Blixseth said that Credit Suisse promised him there would be no personal obligation to him if the club took the big loan. And he said Boston-based CrossHarbor Capital Partners is simply trying to make more money by buying up the debt out of bankruptcy in order to pursue Blixseth personally.
His lawyers have argued that Credit Suisse stacked the bankruptcy trustee board with insiders in order to focus the attack on Blixseth.
"It may be legal, but it's sneaky," Blixseth said standing outside the courtroom during a break.
Testimony focused on whether bankruptcy loomed as Credit Suisse offered the loan and Blixseth transferred money from the club to other assets.
Blixseth experts, spreadsheets and projections demonstrated that the club was flush with money and solvent — while lawyers for the creditors essentially said the numbers were cooked and the exhibits full of "garbage." Blixseth's team also testified that early talk of a club bankruptcy was only done to prepare for any eventuality in Blixseth's ongoing divorce — buoying claims there was no conspiracy to defraud the club.
It's a key point.
If the bankruptcy judge finds that the club was insolvent when Blixseth took away millions for other uses, the judge can invalidate the transfers and force collection from Blixseth's dwindling empire.
He was in Forbes magazine's list of the 400 richest Americans with an estimated fortune of $1.3 billion but now shies away from estimating his worth.
Blixseth's former wife, Edra, received the club in divorce proceedings, then sold it to Sam Byrne of Boston-based CrossHarbor Capital Partners for $115 million. Tim Blixseth said they have joined with Credit Suisse to collude against him and dig into a personal fortune that already cleared the dispute of a contentious divorce.
Accounting experts hired by Tim Blixseth reconstructed finances for the billionaire, for his company and for the club. They testified the club had a half-billion dollar balance sheet before the couple's divorce and the real estate collapse.
Fighting back charges there was an intent to "hinder, delay, or defraud creditors" by transferring money from a failing enterprise and to hide it in a new scheme, Tim Blixseth argued he only gave the club to his wife after she destroyed his ability to sell it or run it with a "scorched earth" divorce.
Tim Blixseth took the stand and said he has now returned to the land and logging business running Western Pacific Timber.
He said he now understands the Credit Suisse loan was too much for the club but said he did not think so at the time, and the prospect only became conversation as the divorce ruined club sales.
"I did not believe that at that particular time, that we had borrowed too much money," he said. "I believed at that time we could pay the money back."