The Yellowstone Club, which includes Bill Gates as a member, can't pay its creditors.
Even a company with billionaire clients can't stay financed in these lean times. The Yellowstone Club, one of the most exclusive resorts in the U.S., filed for bankruptcy this week.
The resort filed for Chapter 11 bankruptcy protection on Monday. Court documents obtained by the Associated Press reveal that Yellowstone owes an estimated $343 million to creditors.
The club's precarious financial position undermines its brand as a playground for the nation's wealthiest. The gated resort community occupies 13,400 acres in the Southwest corner of Montana and counts
Yellowstone had taken big loans as part of an aggressive strategy to grow the club beyond the Rocky Mountains. It bought a golf resort in Scotland, a castle in France and estates in Mexico and the Caribbean in recent years. The club is now backing away from the plan and trying to sell some of those properties.
The club's financial troubles brewed as its founders fought. Husband and wife team Tim and Edra Blixseth started the Yellowstone Club in 1999. They agreed to divorce at the end of 2006.
At first, their divorce was billed as an amicable parting in the Wall Street Journal. The paper reported that they sat down with a bottle of wine and a legal pad to divide up their assets.
The split quickly took a more familiar route: many lawyers and millions of dollars in fees. As part of a divorce settlement, Edra received husband Tim's 50% ownership in the club in August. (See "Edra Blixseth Gets The Yellowstone Club.")
The bankruptcy is sure to further upset the club's affluent members. In May, 125 Yellowstone Clubbers sent a complaint-filled letter to lawyers for Tim and Edra. They expressed growing concerns over the direction of the club and negative publicity. (See "Inside A Billionaire's Real Estate Troubles.")
They also complained about the lack of new member sales. Wealthy Americans are cutting back this year, just like the rest of the population. Some have seen their net worths fall. Others who have escaped the financial crisis unscathed are also throttling spending to avoid obscene extravagance at a time when many others are struggling. (See "The Worried Wealthy.") Now, it seems, even taking a vacation is going to get stressful for them.