judge confirms the rejection of the case against the developer of the complex | Montana News
By PHIL DRAKE, Helena Independent
HELENA, Mont. (AP) – A U.S. bankruptcy judge has upheld court rulings that the state of Montana lacks the legal capacity to file an involuntary bankruptcy petition nearly a decade ago against the co-founder of the Yellowstone Club, Tim Blixseth.
On June 3, Nevada Judge Mike N. Nakagawa upheld the previous judges’ decision to dismiss the involuntary petition, noting that the case has dragged on for nearly 10 years.
The 9th Circuit Court of Appeals ruled in 2019 that the Montana Department of Revenue (MDOR) did not have the legal capacity to file an involuntary bankruptcy petition against Blixseth and referred the case to a court of bankruptcies to see if it should be dismissed.
The Yellowstone Club, a private Big Sky ski and golf resort founded by Blixseth and his ex-wife in 1997, filed for bankruptcy in 2008. Blixseth was accused of pocketing a large chunk of a $ 375 loan. million dollars from Credit Suisse to the station and later gave control of the business to his ex-wife when they divorced in 2008. The club, which featured billionaire Microsoft co-founder Bill Gates and former vice -President Dan Quayle as members, came out of bankruptcy under a new owner.
The Montana Department of Revenue performed an audit of Blixseth and in 2009 said it owed $ 56.8 million in taxes, penalties and interest resulting from eight audit problems, documents show judicial. Montana’s action against Blixseth is separate from Blixseth’s claims against Montana in Nevada for damages due to the unintentional motion, the Independent Record reported.
In 2011, Montana joined the Idaho State Tax Commission and California Franchise Tax Board against Blixseth, however, those two states had made deals and withdrew from the petition, according to documents. judicial.
Nakagawa noted that as of the date of the hearing, nearly a decade had passed since the involuntary petition was filed. He said that since April 20, 2011, only Montana has consistently pursued this issue against Blixseth.
He said the Yellowstone club’s liquidation trustee was apparently interested in continuing the involuntary proceedings against Blixseth, but gave up nearly two years before the 9th Circuit mandate was received by that bankruptcy court.
“Montana maintains that it has ‘vigorously pursued’ this unintentional proceeding,” Nakagawa wrote. “There’s no question that Montana has been more defensive than offensive throughout this process. There is no doubt that the prospect of defending the alleged debtor’s probable claim under Section 303 (i) adds to Montana’s force.
He said Montana had provided no evidence that unsecured creditors eligible to join the action “have been banned from doing so or have even expressed an interest in doing so.”
“Under these circumstances, the dismissal of this nearly decade-long case serves the public interest in the speedy resolution of bankruptcy proceedings,” Nakagawa wrote.
He also said the tribunal wanted to maintain jurisdiction over the claims.
The judge also dismissed another state petition asking him to set aside an earlier dismissal order.
“First, there is no reason to evade the second dismissal order based on the evidence,” Nakagawa wrote, noting that the law “does not provide for” redoing. ” a party in respect of a decision of a court of first instance does not constitute an extraordinary circumstance … “
Samuel A. Schwartz, attorney for Blixseth, said the judge’s ruling allows Blixseth to pursue restitution for the state of Montana.
“The way forward is now quite clear: a lawsuit and damages,” he said.
The Montana Department of Revenue declined to comment on the latest court proceedings.
Schwartz notes that Blixseth was a Forbes 400 billionaire and said his client “was trapped in Montana state purgatory” during a decade of bull market and real estate development.
He said his reputation for having this fight for a decade had been damaged.
“We believe Tim has significant and provable damage,” he said.
In 2016, shortly after his release from Cascade County Jail, Blixseth requested emails from when Governor Steve Bullock was Attorney General, only to be told those emails no longer existed. .
State officials at the time said no laws were broken. Blixseth argued that the state was not following the law. He said the emails would help him with his ongoing litigation with the state.
These emails involved correspondence between Bullock and the government of the day. Brian Schweitzer, and with various employees of the Department of Environmental Quality and the Office of the Attorney General and Governor.
Blixseth said he would ask the state for $ 700 million plus attorney fees. He said he would ask the jury to award punitive damages for the willful destruction of evidence by Bullock and others.
“The state under the leadership of Schweitzer and Bullock used state power to try to stop me from appealing and suing in my efforts to try to stop the Yellowstone Club bankruptcy plan.” , Blixseth said in an email.
Blixseth was sent to jail for civil contempt for violating a bankruptcy judge’s order not to sell Tamarindo, a luxury property in Jalisco, Mexico, for $ 13.8 million in 2011. As of ‘April 2015, he spent 14 months in the Cascade County Regional Detention Center for Contempt of Court Civilians before being released in 2016.
Copyright 2021 The Associated press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.