The Yellowstone Club, an exclusive mountain retreat for the ultra-rich, says it has filed for federal bankruptcy protection after failing to secure new financing - underscoring that even the country's elite can't escape the credit crisis on Wall Street.
Spokesman Bill Keegan said the club filed for Chapter 11 protection in federal bankruptcy court in Montana on Monday. The move came just two months after the club announced an ambitious expansion plan through a partnership with the Arizona-based Discovery Land Company.
The gated, millionaires-only club on 13,400 acres in Montana's Gallatin Mountains boasts a private ski hill and golf course.
Opened in 1999, it counts Dan Quayle and Bill Gates among its 340 members.
In a statement issued to The Associated Press, the club said it had been unable to secure financing arrangements with its creditors and bondholders. It plans to reorganize its finances and emerge from bankruptcy "as soon as possible," the statement said.
"We felt this step was necessary to address short-term liquidity constraints and preserve Yellowstone Club's long-term future," Yellowstone Club CEO Edra Blixseth said.
Monday's bankruptcy filing marked the latest in a string of shake-ups to hit the club. It endured the recent divorce of its billionaire founders, Tim and Edra Blixseth, and in August settled a lawsuit brought by club member and cycling superstar Greg LeMond for $39.5 million.
LeMond and several co-plaintiffs had accused Tim Blixseth of trying to buy out their minority stake in the club for less than its true value.
After emerging from her divorce with control of the club, Edra Blixseth in September laid out plans to build 450 more houses and condos and new amenities, including a luxury spa, a golf clubhouse, a baseball field and more ski runs.
Those plans are on hold pending settlement of the club's financial woes.
Keegan said the club has short-term financing in place to continue day-to-day operations and plans to be open for the winter ski season. He said there would be no immediate layoffs among the club's estimated 600 winter employees, but said that was a possibility "down the road."
The tony club first ran into financial trouble when Tim Blixseth sought to expand even as the real estate market turned south.
Its problems grew after the Blixseths were alleged to have diverted money meant for the club to their own use, according to court documents. At roughly the same time, Tim Blixseth went on a property-buying spree in a bid to take the club concept global, with an enterprise called Yellowstone Club World.
Among his purchases were a chateau in France, a golf resort in Scotland, a villa in Mexico and an estate in the Caribbean.
Earlier this year, a deal to sell the club for a reported $455 million collapsed, leaving Tim and Edra Blixseth feuding over control of the enterprise. Since taking control, Edra Blixseth has moved to sell off some of the club's international properties in a bid to firm up the club's finances.
Keegan said efforts to secure new financing recently stalled as credit markets tightened with the crisis gripping the nation's economy.
"The lending markets froze up so they could not structure a credit facility to their fashion," Keegan said. "They felt this was the best way to protect the members and protect the club and its future."