Developer seeks judge's ouster in Yellowstone Club bankruptcy case

Developer seeks judge's ouster in bankruptcy case
2010-11-22T12:00:00Z 2011-06-09T14:23:04Z Developer seeks judge's ouster in Yellowstone Club bankruptcy caseThe Associated Press The Associated Press
November 22, 2010 12:00 pm  • 

Real estate mogul Tim Blixseth is acting as his own attorney as he seeks to disqualify a bankruptcy judge who slapped the former billionaire with a $40 million fraud judgment.

Blixseth founded Montana's Yellowstone Club, a millionaires-only resort that counts former Vice President Dan Quayle and Los Angeles Dodgers owner Frank McCourt among its members. The ski and golf club fell into bankruptcy two years ago after Blixseth diverted hundreds of millions of dollars for his own use.

The move to oust U.S. Bankruptcy Judge Ralph Kirscher comes after an appeal's court last month faulted the judge's approval of the club's 2009 sale. That $115 million deal allowed the club to emerge from bankruptcy and passed control from Blixseth's ex-wife, Edra Blixseth, to Sam Byrne of Boston-based CrossHarbor Capital.

On Monday, Tim Blixseth alleged he was cheated in the deal — and that Kirscher allowed it to happen. Tim Blixseth said he filed the disqualification motion himself because his own attorneys and others he had contacted in Montana feared retaliation if they took the case.

It's unlikely it was a cost-saving move: Despite seeing his fortune decline from its 2007 peak — reported by Forbes magazine at $1.3 billion — Tim Blixseth is still worth more than $230 million, court documents indicate.

The disqualification motion alleges that Kirscher has shown "general disdain" for Tim Blixseth and was biased in favor of Edra Blixseth, who has been targeted in an FBI investigation into potential bank fraud.

Tim Blixseth also said the judge and at least one member of his staff had inappropriate communications with Tim Blixseth's legal adversaries — although he added that he knew of no intentional wrongdoing by Kirscher.

"I am strictly calling attention to what actually happened — the facts," Tim Blixseth said Monday. "He didn't allow my due process, Fifth Amendment rights. That doesn't make him a good guy or a bad guy. He's just wrong."

Bankruptcy Clerk Bernard McCarthy said Monday the judge would have no immediate comment on the allegations.

"Any comments to make, the judge will make in open court," McCarthy said.

Kirscher — Montana's sole federal bankruptcy judge — will hear the disqualification motion, although any decision he makes would be subject to appeal. The judge on Monday gave parties in the Yellowstone Club bankruptcy and related cases until Dec. 6 to weigh in on the disqualification motion.

Kirscher also noted that the names of three attorneys were listed on the signature page of Tim Blixseth's disqualification motion, which "creates the appearance that perhaps said attorneys had a hand in drafting Blixseth's pro se motion."

The move to disqualify Kirscher is not expected to interfere with a hearing scheduled Dec. 2 on Tim Blixseth's appeal of the club's sale to CrossHarbor.

In remanding that case back to the bankruptcy court for reconsideration, U.S. District Judge Samuel Haddon wrote in an Oct. 29 ruling that Kirscher did not give adequate public notice before approving the sale.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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