Ex-Billionaire Hit with Forced Bankruptcy Petition

By Beacon Staff

BILLINGS – Tax authorities from three states have filed an involuntary bankruptcy petition against former billionaire Tim Blixseth, who rejected the action Wednesday as a “bogus” attempt to derail his legal battle against creditors.

According to the petition, the real estate baron owes $2.3 million in California, Idaho and Montana, although authorities said the true figure is about $58 million. It was filed Tuesday in U.S. Bankruptcy Court in Nevada.

Blixseth has 21 days to respond. He told The Associated Press that he intends to fight the petition and described it as politically motivated.

That charge was rejected as “preposterous” by Montana tax department chief Dan Buck.

Buck said authorities went after Blixseth in Nevada after learning he had transferred most of his assets into a private trust in that state. Montana intends to use the bankruptcy case to force payment on approximately $56 million in state taxes that Blixseth has contested, Buck said.

“This is an action by our professional staff to make sure the tax debt is collected,” Buck said. “We learned there was a transfer of personal assets into a Nevada entity and that was endangering our ability to collect the tax debts we believe are due.”

Blixseth, 60, built his early fortune in the timber industry, then rose to celebrity-page status with his founding of Montana’s ultra-exclusive Yellowstone Club.

The winter playground for the rich in the Madison mountains near Big Sky includes Bill Gates, Dan Quayle and others from the country’s elite among its members.

Just before the resort’s 2008 bankruptcy, Blixseth passed control to ex-wife Edra Blixseth as part of their divorce settlement. Creditors say he tricked his former spouse into a dubious deal that let him make off with $286 million.

On Wednesday, Tim Blixseth acknowledged owing — and said he plans to pay — about $1.3 million in Idaho and California income taxes. That’s less than the $2.1 million the two states say he owes.

But he said the involuntary bankruptcy petition was orchestrated by Montana officials.

He alleged that state’s claim for $219,000 in back taxes was concocted in a scheme by Montana Gov. Brian Schweitzer, Dan Buck and the current owners of the Yellowstone Club. It is part of a plot to undermine his attempts in federal court to unravel the club’s 2009 sale to Boston-based CrossHarbor Capital Partners for $115 million, Tim Blixseth said.

“It is bogus. It is fraudulent,” he said. “Dan Buck and the state of Montana, Brian Schweitzer — they’re behind this. They’re the ones that instigated this and made up the number and organized the other two” states.

Buck said there had been no communication between his office and Schweitzer about Blixseth’s case and that such communications would violate the department’s rules.

If the petition succeeds, Tim Blixseth could be forced to sell off his assets to pay his debts.

That’s what happened to Edra Blixseth, who was discharged from personal bankruptcy in February after two years, following the sale of her jewelry, homes, vehicles and luxury jet.

Forbes once pegged Tim Blixseth’s value at $1.3 billion. Court documents now put the figure at roughly $230 million.

An attorney for the liquidating trust in the Yellowstone Club’s 2008 bankruptcy said that if the states’ bankruptcy petition succeeds, the trust conceivably could join the petition to seek the $286 million it says Tim Blixseth owes.

Trust attorney Charles Hingle said no decision has been made on whether the trust will pursue that option.

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