BILLINGS – Attorneys and others involved in bankruptcy proceedings for Montana’s ultra-exclusive Yellowstone Club have requested more than $10 million in fees and expenses — including some charges billed at more than $900 an hour.
More than half the fees were racked up by the dozens of lawyers, accountants and consultants hired under former club owner Edra Blixseth. She sold the millionaires-only resort last month for $115 million.
Attorneys involved in the case describe their fees as reasonable given the complexities of the bankruptcy case. Yet the total amount of the claims is sure to reinforce the club’s reputation as a beacon of excess.
Attorneys for Credit Suisse racked up the steepest charges — $930 an hour. The financial company has so far recovered only a fraction of $375 million in loans it arranged for the club in 2005.
A spokesman for Blixseth said most the legal fees in the case stemmed from efforts to make sure other creditors got paid before Credit Suisse. That’s because Credit Suisse allowed Blixseth’s ex-husband, Tim, to divert a majority of the loans to other entities under his control.
Bill Keegan, the spokesman for Edra Blixseth, said most of the remaining legal fees were incurred defending against Credit Suisse’s “baseless claims” that Edra had conspired to drive the resort into bankruptcy. Those claims were rejected in U.S. Bankruptcy Court.
Credit Suisse spokesman Bruce Corwin declined to comment.
About $4 million in fees have been approved by the bankruptcy court so far, but there is no guarantee additional fees will be approved.
U.S. Bankruptcy Judge Ralph Kirscher, who is presiding over the case, on Tuesday denied $470,000 in fees submitted by lawyers working for CrossHarbor Capital Partners. That’s the Boston real estate investment firm run by Sam Byrne that now owns the club.
Kirscher said attorneys for Goulston & Storrs PC failed to adequately document their charges. He said they would have to return with a more detailed accounting before he would allow payment.
Attorneys for the Boston firm did not immediately return calls seeking comment.
Fees approved by the court are paid by the debtor’s estate — that is, out of the purchase price for the club.
Despite the steep cost of the litigation, the attorney representing the club’s creditors said a $7 million fund set up by CrossHarbor Capital will ensure most companies and individuals owed money by the club will be paid.
About $6 million in checks are expected to be sent to those creditors this week.
“Bankruptcies are very expensive,” said Thomas Beckett, the Salt Lake City, Utah-based attorney for the Unsecured Creditors Committee. Beckett’s firm is seeking more than $1.5 million in fees.
“But it’s not that all the purchase price went to pay off lawyers,” he added.
A group of lawyers representing cycling star Greg LeMond, one of the club’s original members, is seeking $400,000 for work done in a separate case from last year in state district court.
The lawyers say they deserve payment because they were the first to unearth Tim Blixseth’s diversion of the Credit Suisse loans. Kirscher has yet to rule on their request.
U.S. Bankruptcy Court Clerk Bernard McCarthy said there is no set standard for approval of fee claims.
“Judges have to look at whether or not what’s being done provides an actual value,” he said.
McCarthy pointed to the bankruptcy of Crown Oil in the late 1990s. In that case, he said, Kirscher sharply cut payments to attorneys after deciding the services provided did not stack up to the fees charged.