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BILLINGS — Montana's ultra-posh Yellowstone Club is in new hands, following a $115 million deal that the new owner hopes will close the door on the resort's much publicized descent into bankruptcy.
Eight months ago, the millionaires-only club was on the verge of liquidation, a victim of its prior owners' excesses and the broader economic downturn that choked off the flow of money fueling the club's rise.
On Friday, CrossHarbor Capital Partners of Boston bought the 13,600-acre private ski resort about 50 miles south of Bozeman at what was considered a bargain-basement price.
The firm's managing partner, Sam Byrne, had offered to buy the club last year for $470 million and had already invested more than $200 million in club real estate over the last several years.
Byrne acknowledged Friday the club's once-sterling reputation will need some polishing.
"It's going to take time to win back the trust of members and the community and re-establish the brand," he said. "We're confident that the place has a bright future."
The resort was nearly pulled apart last year during the bitter and high-profile divorce of its founders, Edra and Tim Blixseth. Later came revelations that the pair had drained tens of millions of dollars from the resort, helping push it more than $400 million into debt.
The collapse was extraordinary for an enterprise that counts Microsoft Corp.'s Bill Gates and hotel magnate Barry Sternlicht as members.
Those who are allowed to join must buy real estate with price tags that can top $10 million, and pay a $300,000 deposit. The privacy members thought their money was buying was shattered when the club's rolls were made public as part of its bankruptcy case.
With the Blixseths now out of the picture — and fighting each other over the remains of a personal fortune once estimated at $1.3 billion — members are looking to Byrne to get the club out of the headlines.
"There's going to be a massive sigh of relief, a collective sigh of relief," said Bill Curtis, a club member and the chief executive of CurtCo Media, which publishes the Robb Report, a magazine that caters to the wealthy.
Only about 300 of the club's more than 800 available memberships have been filled since it opened in 2000. Just three properties changed hands during its months in bankruptcy.
Curtis said Friday's deal will shake up the market for the club's property, but he cautioned that the resort isn't out of rough waters yet.
"If you ask me what the economy's going to do, it's going to continue to make it a challenge," he said. "Nothing's going to happen overnight."
Byrne said more than $150 million on top of the purchase price has been pledged to pay for improvements at the resort.
That's likely to include the club's 120,000-square-foot centerpiece Warren Miller Lodge — left unfinished despite a reported $100 million investment.
Byrne also said he persuaded a large group of members to put money behind his plans to recapitalize the resort. He declined to offer specifics.
The club will continue to be managed by the Discovery Land Co., brought in last year when Edra Blixseth took over the operation following her divorce.
Tim Blixseth tried to scuttle the deal between his ex-wife and Byrne until the day the sale became final. He has claimed they colluded to drive the resort into a financial hole so Byrne could scoop it up on the cheap.
Those claims were repeatedly rejected by U.S. Bankruptcy Judge Ralph Kirscher in Butte, Mont., and on Thursday he denied Tim Blixseth's latest effort to block the deal through a court-ordered stay.
In his opinion, Kirscher said the parties in the sale had acted in good faith. He said Tim Blixseth's "generalized allegations of misconduct" were irrelevant.
He added that the case — which involved more than 100 lawyers and resulted in several spin-off lawsuits that are still being resolved — "was of a magnitude never seen before in this court."
