BILLINGS – A three-judge panel has reversed a lower court’s ruling that reduced the damages owed by a former billionaire real estate mogul in the bankruptcy of a Montana resort for the ultrarich.
The 9th U.S. Circuit Court of Appeals rejected a previous determination that banking firm Credit Suisse was equally at fault in the 2008 bankruptcy of the Yellowstone Club near Big Sky.
Credit Suisse loaned the ski and golf resort $375 million in 2005, knowing founder Tim Blixseth intended to divert most of that money for his own use.
Attorneys for the club’s creditors said Monday that the ruling puts Blixseth on the hook for $286 million in damages.
Yet it’s unclear if Blixseth has the means to pay up. He’s already sold many of his assets, according to court records, and has refused to say how much money and other property he still has.
U.S. Bankruptcy Judge Ralph Kirscher issued a judgment against Blixseth in 2010 saying the Washington state resident fraudulently transferred the Credit Suisse loan for personal use. That ruling — later upheld in U.S. District Court — said Credit Suisse shared responsibility under a legal doctrine known as “unclean hands” due to the manner in which it had marketed the loan to Blixseth.
The 9th Circuit panel disagreed and sent the case back to the lower court for a recalculation of damages.
“The lenders may have been reckless in issuing their loans, but such wrongdoing is not comparable in degree or kind to Blixseth’s wrongdoing,” the judges wrote. “Blixseth defrauded the Club entities and their minority members, massively enriching himself; breached fiduciary duties; and then constructed barriers to recovery of his ill-gotten gains.”
Yellowstone Club Liquidating Trustee Brian Glasser, a West Virginia attorney representing the club’s remaining creditors, said Blixseth is running out of options to avoid payment.
“Tim’s ability to continue to delay and defer all this is being exhausted,” Glasser said.
Blixseth and his attorney in the case did not immediately respond to a request for comment.
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