HELENA – The bankruptcy judge in the Yellowstone Club trial ruled Wednesday that Credit Suisse must offer about $42 million in cash to clear other creditor’s claims on top of any bid it makes for the resort.
The ruling from Judge Ralph Kirscher follows a partial finding issued Tuesday that Credit Suisse’s $375 million loan to the now-bankrupt club was predatory. That order gave priority to paying many of the club’s other debts before repaying the loan.
Since Credit Suisse is using its lien on the club to make one of two bids in an auction for the exclusive resort, the ruling also requires the bank to cover those other parties’ debts in any offer it makes.
But the auction taking place in Billings hit a snag Wednesday morning over disagreements about the actual amount of these other prioritized claims — and how Credit Suisse could meet it obligation for repayment.
Under the judge’s order, about $7 million owed to a group of trade creditors and another $35 million in other debts will have to be met by a cash component in any Credit Suisse bid.
But the bank can offset another $14.3 million in disputed debt with a promise to pay those creditors from money generated by liquidation of the club’s assets. Those repayments, however, will not take priority over money that is due to new investors.
The exact structure of the Credit Suisse bid is not known, but some cash is coming from new investors.
The other bidder, CrossHarbor Capital Partners of Boston, has offered a starting bid of $100 million for the club, within which $7.5 million is reserved to cover the trade creditors’ claims. The total bid consists of $30 million in cash, $70 million in assumed debt and a promise to invest $75 million.
The auction for the billionaire’s club that is more than $400 million in debt may start later Wednesday.
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