Judge Rules Credit Suisse $375 Million Loan Similar to Ginn Loan as Predatory

A preliminary ruling in the Yellowstone Club bankruptcy subordinates Credit Suisse’s claim to those of unsecured creditors. The loan was similar to a $675M Credit Suisse loan to the Ginn Company

Palm Coast, Florida – May 14, 2009 – US Bankruptcy judge presiding over the Yellowstone Club case ruled Tuesday that Credit Suisse would have to step behind other creditors, characterizing the loan as "predatory." The $375 million loan to the exclusive 13,600-acre Montana ski and golf resort is similar to Credit Suisse loans to other luxury resort developers, including Lake Las Vegas, in Nevada and Tamarack Resort in Idaho and a $675 million loan to the Florida-based Ginn Company.
"The only plausible explanation for Credit Suisse’s actions is that it was simply driven by the fees it was extracting from the loans it was selling, and letting the chips fall where they may," wrote U.S. Bankruptcy Judge Ralph Kirscher in a preliminary ruling. Credit Suisse collected $7.5 million in fees on the Yellowstone Club loan. Credit Suisse "encouraged developers of high-end residential resorts to take unnecessary loans," Kirscher wrote in his order. "The higher the amount, the fatter the fee to Credit Suisse." Kirscher added, "[Credit Suisse’s action] were so far overreaching and self-serving that they shocked the conscience of the court."
"The only equitable remedy to compensate for Credit Suisse’s overreaching and predatory lending practices in this instance is to subordinate Credit Suisse’s first lien position to that of Cross-Harbor’s super-priority debtor-in-possession financing and to subordinate such lien to that of the allowed claims of unsecured creditors," wrote the judge.
Any Credit Suisse bid for Yellowstone Club assets must include a minimum of $43.1 million in cash and a note for $14.3 million to repay creditors ahead of the bank.
$209 million of the $375 million dollar loan never found its way to the Yellowstone Club. It was distributed directly to the club’s owners, Tim and Edra Blixseth. Similarly, a Standard & Poor’s report reveals that the distribution of the $675 million Ginn loan included "a very large distribution to the equity sponsors ($332 million) and pay related fees and expenses ($18 million.)" Presumably, the $18 million went to Credit Suisse. The equity sponsors are listed as "affiliates of Bobby Ginn, chairman and chief executive officer of The Ginn Cos. LLC (Ginn; 20% equity interest), and by funds managed by Lubert-Adler Partners L.P. (Lubert-Adler; 80% equity interest)."
Ginn’s June ’08 default on the loan resulted in the bankruptcy sale of company assets at two luxury golfing communities in South Florida (Tesoro in Port St. Lucie and Quail West near Naples) and forced the sale of Laurelmor, a skiing and golfing community under development near Blowing Rock, NC.

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3 replies
  1. frankie cocanote
    frankie cocanote says:


    looks like the crooks finally got caught.all this funny money deals didn’t pass the smell test of a judge.if it looks like crap ‘ taste like crap, it must be crap. keep up the good toby

  2. dan
    dan says:

    what did they care ?

    Wheres the mention of the hedge funds ? as long as they got their fee and kickbacks ( CS and the hedge funds )so what if they loaned 30% above inflated retail values it was other peoples money ( hedge funds ) , he now owed more than it was worth thats what enabled BOBBY to file his usual bankruptcy and pocket the money on a built out facility . WOW , It is fraud and CS and the hedge funds are complicit , look at the missing amounts in the loan ( kickbacks ) . where are the bankruptcy courts , the trustees and judges ? where is justice ?

  3. Mikey
    Mikey says:


    Why on Earth would anyone "taste" crap, especially a Judge?? I mean if it smells like crap and looks like crap, certainly don’t go and put it in your mouth.

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