Yellowstone Mountain Club sale closes; company exits bankruptcy

By Caroline Salls

Pittsburgh, July 17 - Yellowstone Mountain Club emerged from Chapter 11 bankruptcy when its plan of reorganization took effect on Friday and the sale of the Yellowstone Club's equity interests to an investment partnership led by CrossHabor Capital Partners closed.

According to a CrossHarbor news release, the investment partnership is comprised of a large group of Yellowstone Club members and Discovery Land Co. LLC.

"We are pleased that we have acquired the Yellowstone Club so that we can provide the leadership, professional management and development expertise needed to ensure its long-term success," CrossHarbor managing partner and co-founder Sam Byrne said in the release.

"Today, the club emerges from Chapter 11 as a well capitalized enterprise, positioned to maintain and build on its premier status for the benefit of the club's members, employees and the Big Sky community.

"With a solid business plan now in place, we are confident that the Club has a very bright future."

Under the plan of reorganization confirmed by the U.S. Bankruptcy Court for the District of Montana on June 3, a $15 million fund will be established by CrossHarbor to ensure payment to local trade and other creditors, and the allowed claims of all or substantially all general unsecured creditors are expected to be paid in full.

As previously reported, the plan calls for the continued operation and development of the company's project through the issuance of 100% of the membership interest in the reorganized Yellowstone in exchange for payment of at least $30 million in cash and payments on a $70 million secured promissory note payable by the reorganized company.

CrossHarbor said the designation of beneficiaries of the trade creditor fund and reconciliation and allowance of their claims is proceeding on an expedited basis. Most, if not all, of the payments on these claims will be made in the next 30 to 60 days.

Creditor treatment

Treatment of creditors will include:

• Holders of administrative claims, $1.2 million in priority tax claims, $212,000 of pre-bankruptcy priority claims, and convenience claims of $5,000 or less will be paid in full in cash;

• Holders of $1.6 million in other secured claims will either have their rights reinstated or receive the collateral securing the claim;

• The distribution for holders of pre-bankruptcy first-lien claims will depend on the allocated portion of the equity purchase payment. Based on this, these creditors will receive some or all of the promissory note paid for the issuance of new equity in the reorganized company;

• Holders of general unsecured claims, lender deficiency claims, Pioneer/Frontier member rejection claims and intercompany claims will receive distributions from the company's liquidating trusts, which will be used to liquidate all of Yellowstone's non-operating assets and avoidance actions;

• Holders of equity interests will be residual beneficiaries of the liquidating trusts, entitling them to receive trust distributions after payment in full of all other allowed claims;

• Holders of American Bank claims will receive interest-only payments for 23 months and will receive the entire balance of the claim on the 24-month anniversary of the plan effective date;

• Holders of Prim Vintage Development, LP secured claims will retain their liens and be free to exercise their collateral-related rights. The collateral will not be re-vested in the reorganized company; and

• Holders of honorary member rejection claims, company member rejection claims and Founders Circle member rejection claims will receive trust distributions along with unsecured creditors and will have the option to waive their claims in exchange for a new membership agreement.

Located in Big Sky, Mont., Yellowstone Club is a 13,400-acre private club in the Rocky Mountains. It filed for bankruptcy on Nov. 10, 2008. Its Chapter 11 case number is 08-61570.

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