Judge won't step down from Yellowstone Club cases

By Matthew Brown

Associated Press

Published: Monday, Feb. 28 2011 2:35 p.m. MST

BILLINGS, Mont. — A federal judge has denied a request to recuse himself from the tangle of legal cases surrounding the bankruptcy of Montana's ultra-exclusive Yellowstone Club.

Club founder Tim Blixseth had alleged bias on the part of U.S. Bankruptcy Judge Ralph Kirscher in Butte. Blixseth claims the judge and members of his staff had inappropriate communications with Blixseth's legal adversaries and had faced political pressure to rule against Blixseth.

Kirscher, who is overseeing more than 30 lawsuits related to the club's 2008 bankruptcy, issued a decision late Friday rejecting the allegations.

"This Court has not and will not succumb to any pressure, political or otherwise," Kirscher wrote. "This Court is an independent and unbiased member of the federal judiciary."

The judge added that Blixseth's "ultimate goal" appeared to be to upset prior rulings in the cases. Among those was a $40 million civil judgment against Blixseth last year for his part in the club's financial collapse.

Blixseth could not be immediately reached for comment, but one of his lawyers said an appeal of Kirscher's decision already was in the works. The lawyer, Mike Flynn, added that Kirscher's claims that Blixseth was trying to undo prior rulings missed the point of why he wanted the judge off the case.

"It's simply Mr. Blixseth protecting his basic constitutional rights," Flynn said.

Tim Blixseth developed the private ski and golf resort south of Bozeman in the mid-1990s with his ex-wife, Edra, attracting a wealthy and elite membership that included Microsoft Corp. co-founder Bill Gates and former Vice President Dan Quayle.

Edra Blixseth took over the club following the couple's 2008 divorce and it went into bankruptcy protection within months. It emerged from bankruptcy after being sold in 2009 to CrossHarbor Capital Partners of Boston.

Edra Blixseth filed for personal bankruptcy in March 2009. Most of her assets have since been sold to help cover her debts. Her remaining debts were discharged by Kirscher in an order issued earlier this month.

Tim Blixseth has claimed repeatedly that his ex-wife conspired with CrossHarbor managing partner Sam Byrne to put the resort into bankruptcy so he could buy it at a fraction of its true value.

In late 2007, Byrne Tim Blixseth and Byrne in late 2007 had reached a deal under which CrossHarbor was going to buy the club for more than $450 million. But the purchase was cancelled and Byrne ended up buying the club through a bankruptcy auction for $115 million.

Edra Blixseth said Monday that her discharge "speaks volumes" to allegations from Tim Blixseth and his lawyer, Flynn, that she committed bankruptcy fraud.

"If there were any questions that this was true, I certainly would not have gotten the discharge," she wrote in an e-mail to The Associated Press. "Now being discharged from the (bankruptcy) I can attempt to move forward with life."

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