Credit Suisse Loses Bid for Yellowstone Club

CrossHarbor wins plush private resort with $115 million bid. Unsecured creditors will be paid before Credit Suisse sees any money.

Palm Coast, Florida – May 19, 2009 – The Yellowstone Club, a millionaires-only private ski and golf community near Big Sky, Montana now belongs to Boston-based CrossHarbor. CrossHarbor had provided debtor in possession financing for the club when the default on a $375 million Credit Suisse loan forced the exclusive club into bankruptcy. In a strongly worded ruling, the bankruptcy judge recently ruled the Credit Suisse loan was "predatory" and that they "shocked the conscience of the court." He placed unsecure creditors ahead of Credit Suisse’s first lien holder position. Having lost their bargaining chip and facing a potentially disastrous final ruling on the predatory lending claim, Credit Suisse struck a deal with CrossHarbor.
Under the court approved agreement, unsecured creditors should get paid in full from the $35 million cash part of the deal. Credit Suisse will get a new note for $80 million. The agreement was approved by Judge Ralph Kirscher on Monday. It paves the way for a final reorganization plan expected within the next few weeks.
The loan money was provided by private investors. Credit Suisse simply facilitated the loan, collecting excessive fees along the way. Judge Kirscher characterized Credit Suisse’s actions as "so far overreaching and self-serving that they shocked the conscience of the courts."
The Yellowstone Club loan was one of several Credit Suisse made to developers of high-end resorts. Both it and a $675 million loan to the Ginn Company included substantial direct distributions from the proceeds of the loan to equity partners. When Ginn later defaulted, it precipitated a bankruptcy liquidation sale of remaining assets at two communities and the forced sale of another.
The 13,600-acre Yellowstone Club is truly for the rich and famous. Bill Gates is a member. Plans for one 53,000 square foot home sited on a 160-acre lot included 10 bedrooms and a private gondola to a nearby peak. It was offered at $155 million.

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