Former billionaire sues Montana for forced bankruptcy

HELENA, Mont. (AP) – A former billionaire has filed a lawsuit against the Montana Department of Revenue seeking hundreds of millions of dollars in damages as well as attorney fees after a federal judge ruled the The state had wrongly tried to force it into bankruptcy to collect taxes that the state said it owed.

The department’s communications director Jason Slead said Thursday the agency’s attorneys were aware of Tim Blixseth’s complaint but had not seen it and made no comment.

Blixseth and his third wife, Edra, founded the exclusive Yellowstone Club resort near Big Sky in the late 1990s. The private ski resort and golf course in the mountains near Yellowstone National Park attracts celebrities and tourists alike. ‘other wealthy members.

The club went bankrupt in 2008 following the couple’s divorce. This started a legal saga that pitted Blixseth against the club’s creditors, Montana tax authorities and banking giant Credit Suisse, which had loaned the club $ 375 million it was unable to repay in full.

Much of the 2005 loan went to Blixseth, who used it to fund a jet-set lifestyle he said was part of efforts to create an international luxury vacation club modeled after its Montana resort, which eventually emerged from bankruptcy in 2009 under new ownership.

In 2006, Blixseth bought the Tamarindo Resort in Mexico for $ 40 million and a residence on a private island in the Turks and Caicos Islands for $ 28 million, his complaint says, listing the financial losses he suffered in court. sell the properties to pay for legal fees. .

Blixseth has consistently denied wrongdoing despite a string of court rulings that found he fraudulently transferred the loan to get rich.

Yellowstone Club creditors suspected Blixseth had hidden assets. They spent years chasing him, but only raised a small fraction of the $ 286 million they once sought. Federal courts had rendered judgments against Blixseth totaling $ 525 million.

The club’s creditors settled $ 3 million in 2018. Oregon real estate developer Martin Kehoe made the payment in exchange for transferring Blixseth to Kehoe for the right to the proceeds of his scheduled lawsuit against the Department of Revenue in Canada. Montana. Blixseth has since reimbursed Kehoe, Blixseth’s attorney John Doubek said Thursday, but declined to say how.

In June, a judge in the U.S. bankruptcy court in Nevada upheld lower court rulings that the state of Montana did not have the legal capacity to file its involuntary bankruptcy petition against Blixseth in 2011. Montana was looking to collect around $ 219,000 in taxes, but also hoped to use the bankruptcy filing to force payment of an additional $ 56 million in taxes that Blixseth had disputed, the then revenue director said. , Dan Bucks, in 2011.

Under federal law, involuntary bankruptcies can be sued to collect debts if at least three entities file the petition and the amounts owed are not disputed. California and Idaho initially joined the petition, but settled with Blixseth about two weeks after the case was filed.

Montana refused to settle, Blixseth’s lawyers said.

Blixseth argued that the amounts owed were in dispute, noting that California and Idaho were content with reduced payments and that it still disputed the amount Montana was seeking in hearings before the Tax Appeal Board. state when the petition was filed.

The lawsuit that Blixseth filed on December 23 in the U.S. Bankruptcy Court in Nevada, and first reported by the Independent recording, seeks a jury trial and seeks $ 300 million in damages in Montana because he was forced to sell resorts and other properties, including a plane and a yacht, with financial losses to fund its legal battles. He is also seeking $ 500 million in damages for lost financial opportunities, Doubek said.

His legal fees for the involuntary bankruptcy are around $ 10 million, Doubek said. The ongoing legal battle has also damaged Blixseth’s personal and professional reputation and health, led to his imprisonment and hampered his philanthropic efforts, according to the complaint.

Blixseth was jailed for 14 months, starting in 2015, for violating a bankruptcy judge’s order not to sell the Tamarindo Resort, then refused to say what he did with the $ 13.8 million. dollars of product. A federal appeals court ultimately ordered his release.

Blixseth is also seeking punitive damages and sanctions against the state.


AP reporter Matthew Brown in Billings, MT, contributed to this story.

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