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Yellowstone Club Founder Blixseth Wins Bankruptcy Case Dismissal

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May 18 (Bloomberg) -- Tim Blixseth, co-founder of the Yellowstone Club for millionaires, won dismissal of an involuntary bankruptcy petition filed by Montana in Las Vegas. A lawyer for Montana said the state can refile its petition.

Tax officials from California, Montana and Idaho in April filed involuntary bankruptcy petitions against Blixseth. Blixseth’s lawyer, Charles Axelrod, said today in a phone interview that U.S. Bankruptcy Judge Bruce Markell in Las Vegas dismissed Montana’s petition, and that Blixseth paid $925,000 in back taxes owed to Idaho and $994,000 owed to California.

The sums paid to Idaho and California represent a 15 percent discount and can be reclaimed under a “reservation of rights” claim, Axelrod said. “Mr. Blixseth is no longer in bankruptcy,” he said.

Rodney Jean, a lawyer representing Montana, said the state’s claims were dismissed based on technical arguments over where such petitions should be filed.

“The court dismissed based only on venue,” and gave Montana the opportunity to refile its claim in another state, Jean said. The ruling has “nothing to do with the substantive validity of the tax claim,” he said.

Dan Bucks, Montana’s director of revenue, said in April that Blixseth owes the state about $56 million in back taxes, and that he transferred assets from various states to an entity in Nevada to avoid paying taxes.

Ski Resort

Blixseth and his former wife, Edra Blixseth, founded the Yellowstone Club, near Big Sky, Montana, in 2000 as a ski resort for millionaires looking for vacation homes. Members paid a combined total of $205 million for 72 properties in 2005 alone.

The couple took cash for their personal use from a $375 million loan arranged by Credit Suisse Group AG that year, according to a court ruling by U.S. Bankruptcy Judge Ralph B. Kirscher in Montana. Finances at the club deteriorated thereafter, and the club eventually went bankrupt, Kirscher found.

Blixseth claimed the allegations in Montana are a personal attack on him by Governor Brian D. Schweitzer. The governor is trying to help an investor in the Yellowstone Club who is opposing Blixseth in bankruptcy court in Montana, Blixseth has said. He was ordered to pay $40 million to the club’s creditors under a September ruling by Kirscher. Blixseth said he’s appealing that judgment.

The case is in re Blixseth, 11-15010, U.S. Bankruptcy Court, District of Nevada (Las Vegas). The Yellowstone case is In re Yellowstone Mountain Club LLC, 08-61570, U.S. Bankruptcy Court, District of Montana (Butte).

To contact the reporter on this story: Joel Rosenblatt in San Francisco at

To contact the editor responsible for this story: Michael Hytha at

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