Credit Suisse Dressed Down Over Yellowstone Loan

[Jeff Tumbarello]

http://dealbook.blogs.nytimes.com/2009/05/14/credit-suisse-dressed-down-over-yellowstone-loan/

If Chrysler’s secured creditors think they are getting rough treatment in bankruptcy court, they should consider what just happened to Credit Suisse in Montana.

In a ruling that crackles with outrage, the judge overseeing the bankruptcy of the Yellowstone Club, a mountain retreat for the super-rich, took the rare step of lowering the priority of Credit Suisse’s secured debt, putting it behind even the claims of Yellowstone’s unsecured creditors, like vendors. In doing so, the court described Credit Suisse’s $375 million loan to Yellowstone as “overreaching and predatory.â€

“The naked greed in this case, combined with Credit Suisse’s complete disregard for the debtors or any other person or entity who was subordinated to Credit Suisse’s first-lien position, shocks the conscience of this court,†Judge Ralph Kirscher wrote in Wednesday’s interim decision.

Yellowstone’s Chapter 11 case has turned the upscale resort, which The New York Times’s Kirk Johnson described in November as an “exemplar of exclusivity,†into a battleground over which creditors get first dibs on its assets.

The Deal’s Dealscape blog draws a parallel between Credit Suisse’s demotion in the creditor pecking order — what is known in legal terms as equitable subordination — and Chrysler’s proposed reorganization. Chrysler has put forward a plan that gives the automaker’s secured creditors less favorable treatment than other kinds of creditors, and even Fiat, which, Dealscape points out, is not even a creditor at all.

Some holders of Chrysler’s secured debt objected to their treatment in court, but the dissident group has fallen apart, and Chrysler’s plan appears to be going forward.

The facts in the Yellowstone bankruptcy are unlike Chrysler’s, however.

The judge in the Yellowstone case essentially found that Credit Suisse was eager to collect the fees for the 2005 loan but cared little about whether Yellowstone could handle the debt load. A large part of the loan proceeds were almost immediately distributed to “personal accounts and payoffs†for Tim Blixseth, who founded Yellowstone and controlled it, and his former wife, Edra.

“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,†the judge wrote.

“Unfortunately for Credit Suisse,†he added, “those chips fell in this court.â€

A Credit Suisse spokesman told Reuters that the company was disappointed with the ruling, disagreed with the court’s findings and was considering its options.

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When you and several of your elite friends gather borrowed capital to "buy" yourselves a Castle Hideout, you'll probably end up hiding out in some cabin where HUD subsidizes your payments instead.

They'll be fine, as there are lots of Bankers, Attorneys, Gov't
"leaders" & Stock Brokers in Ali Baba's 40-member "Private Clubs" - they'll find enough money to get to the James Boys' former hideout long enough for the heat to blow over.

First they'll buy a Judge or two, then the games can begin in earnest to pre-market the story of the end of this club without harming a single "owner" in it except some hired hand who thought he was important for a while. He IS important, now that someone must hang for the deeds of the favored few.

The "ruling" won't look like any you've ever seen, but that's because you haven't seen the REAL law practiced among the folks who own the authors AND the guards of that library.

Like the Constitution, its words were meant to protect everyone, but they generally protect better those who can afford the guard's
contractual fees..

Just claim a constitutionally-based complaint while claiming indigenous status some day - it'll all be clear as day from your little window to the exercise yard

Heh heh.. The games rich people play don't matter much in the real world, but they DO provide entertainment for the truly-bored.

Now, forget the outcome of the "case", look at these two links and see if you can memorize the creation-through-destruction timeline - you just might realize you've seen it before, and I assure you it'll happen again. If you last long enough and keep your head on a swivel, you'll see it all over the place as the fog is lifted in self-defense in the future.

The "Club" and its marketing wonders (the bait):

http://www.theyellowstoneclub.com/index.aspx

Now, note the Credit Suisse funding in MONTANA of all places, with "borrowers" worth BAZILLIONS and everything.. Those 70-year old gold teeth seemed for a while to be about to pay off, but along came Mr. Ill-begotten & things just fell apart... Oddly enough the "money" was gone in a flash, but it took the bean-counters YEARS to recognize the theft (while the favored few enjoyed their playground without a clue).

Of course when your accountant's name is MOSES, your *** is gonna be dragged at least 40 miles through some tough territory...

http://www.newwest.net/topic/article/yellowstone_club_how_to_go_broke_on_375_million/C35/L35/

Just another story of money returning to the vapor it was, nothing
serious, a few might get slapped, but NOBODY IS GOING TO RECOVER VAPOR PAPER here or elsewhere. Even Moses doesn't realize those gold teeth were converted to vapor paper so long ago it doesn't matter muchnow.

The "lost money" isn't "gone", it never existed. It's a part of the
equation most cannot get their minds wrapped around, but history will figure it out one day.