Yellowstone Club on the Ropes, Newwest.net
Yellowstone Club Scrambles For Bailout in Bankruptcy Court With lender Credit Suisse unable to raise cash, Boston-based CrossHarbor Capital Partners may be poised to take control of the ultra-luxury club. But no ruling was issued Tuesday.
By Robert Struckman, Nov. 25, 2008, Newwest.net
A day-long battle over the future of the bankrupt Yellowstone Club played out in U.S. Bankruptcy Court in Butte Tuesday, with lender Credit Suisse desperately trying to maintain control of the property and block a financing deal from Boston-based CrossHarbor Capital. While Judge Ralph B. Kirscher did not issue an immediate ruling, he appeared highly skeptical of Credit Suisse’s ability to put forward a viable proposal after an interim funding deal fell apart just before the court hearing.
Credit Suisse, one of the world’s largest financial institutions, has been unable to come up with the money for a seven-figure loan package that would enable it to keep control of the club and sell the assets. The bank’s plan apparently involved mothballing the club while it sought buyers—a strategy that many involved in the case believe would be a disaster.
CrossHarbor, for its part, has proposed putting up $20 million to keep the club operating through the winter season while a long-term re-organization plan is developed. Club members, some of whom were in court Tuesday and who are understandably eager to see the club remain open, agreed to pitch in another $5 million as part of the CrossHarbor plan.
The Yellowstone Club, a private ski and golf resort for the mega-rich near Big Sky, Mont., filed for Chapter 11 bankruptcy on Nov. 10, and a few days later the court approved an interim financing deal from Credit Suisse, which is the club’s primary lender and thus the biggest creditor in the bankruptcy proceeding. That loan was for just $4.4 million, enough to keep the club running for a few weeks while a broader deal was hammered out. The club has debts of at least $365 million, with the bulk of that owed to a consortium of lenders led by Credit Suisse.
If the CrossHarbor deal goes forward, Credit Suisse will no longer be first in line to be paid off if and when the club is able to re-organize, and thus it opposes the proposal. As the primary creditor, its stance carries a lot of legal weight in the bankruptcy proceedings.
But a plan that involved closing the club, even temporarily, would likely destroy much of its value and thus be detrimental to most creditors—not to mention club members, employees and the communities of Bozeman and Big Sky.
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