BILLINGS – The bankrupt co-founder of Montana’s swank Yellowstone Club is being sued for the alleged illegal transfer of $1.1 million from a failed spin-off of the millionaires-only ski resort.
Edra Blixseth sold the Yellowstone Club in southwestern Montana for $115 million last month and has remaining debts estimated at $357 million.
Her fortune began to crumble soon after her divorce last August. That’s also when she took control of the since-disbanded Yellowstone Club World — the entity she’s now accused of taking money from.
The lawsuit against Blixseth was filed this week by Butte attorney Ross Richardson, a court-appointed trustee for creditors of Yellowstone Club World. Creditors say Blixseth transferred the $1.1 million out of the enterprise last September — just two months before the original Yellowstone Club filed for bankruptcy protection.
The world club was created in 2005 by Blixseth’s ex, Tim Blixseth, who had envisioned a sort of time-share arrangement that would give the ultrarich access to luxury estates in France, Scotland, the Caribbean and elsewhere.
But few people were willing to pay the $1.5 million deposit and the enterprise folded last year.
The lawsuit does not detail what Edra Blixseth did with the money. Court documents list eight families and individuals still owed their $1.5 million membership deposits. That’s out of $25 million in total debts for Yellowstone Club World.
Richardson did not immediately return calls seeking comment.
Blixseth indicated in an e-mail that she used the money to plug a cash flow hole in the original club. She says the club was in the red when she took it over from her former husband last year. She said the money came from a canceled contract with NetJets, a private jet charter company.
“We turned in the lease with NetJets that was no longer being used. The majority of those funds were used to cover the overdrafts of the (Yellowstone Club) accounts,” she wrote.
As her legal pressures mount, Edra Blixseth has managed to put off until July 10 a forced sale of her houses, cars, fine art, jewelry and other possessions.
The delay coincides with Blixseth’s appeal this week of a recent court ruling placing her under Chapter 7, which calls for asset liquidation.
In the wake of the original club’s bankruptcy, at least one Yellowstone Club World asset has been turned over to creditors — Chateau Farcheville, a castle in France once up for sale for more than $60 million.
The properties that made up the world club were bought largely with a $375 million loan arranged for the Montana club through Credit Suisse.
U.S. Bankruptcy Judge Ralph Kirscher in May issued an order in which he blasted the “naked greed” surrounding the loan, which fueled the Blixseths’ jet-setting lifestyle over the last few years.
Kirscher also criticized Credit Suisse for arranging the loan for Tim Blixseth knowing it would not go to his resort. That order was vacated after the club reached a settlement with its creditors.