Yellowstone Mountain Club Investors Seek Stay To Protect $26M Settlement

by Tara Arick on November 9, 2012 · 0 comments

in Contract Law

- From LexisNexis® Mealey’s™ Daily Legal News.

A group of investors in the bankrupt Yellowstone Mountain Club LLC (YMC) on Nov. 6 moved in the U.S. Bankruptcy Court for the District of Montana to compel the enforcement of the automatic stay and for damages against YMC members who dispute a $ 26 million prepetition settlement in Montana state court (In Re: Yellowstone Mountain Club LLC, No. 08-61570, Chapter 11, D. Mont. Bkcy.).

Investor Settlement

Investors led by Tour de France winning cyclist Greg LeMond moved to compel the Bankruptcy Court to enforce the automatic stay on grounds that a lawsuit filed in Montana state court that disputes the validity of the $ 26 million settlement reached between them and YMC violated the automatic stay in place in the bankruptcy proceeding.

LeMond, along with David L. and Sacia B. Morris, Sacia Enterprises Inc. and Jorge V. Jasson (collectively, the LeMond parties), contend that the automatic stay prohibits actions that seek to obtain property of a bankruptcy estate, including the asserting of claims that belong to the estate.

The LeMond parties maintain that the crux of the state court complaint is that the LeMond parties received improper distributions through the settlement in question. The parties that filed the state court action argue that they should be permitted to recover the alleged improper distributions.

Standing

The LeMond parties insist that only YMC as an entity, and not individual YMC members, have standing to pursue claims for wrongful distribution. Moreover, actions taken in violation of the automatic stay are void, the LeMond parties argue, and the Bankruptcy Court should declare the state court lawsuit void ab initio.

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