BIG SKY - On a recent bluebird afternoon, Montana native and skiing legend Scot Schmidt made quick powder turns through a steep tree glade.

It hadn't snowed for days, but Schmidt knew of some untouched pockets of snow to poach.

At the end of the run, Schmidt pulled into the lift line near a mountain mansion that glittered in the sunshine. When Schmidt's chair came around, it swept him up the mountain over a roped-off area where two letters had been carved in the snow: YC.

Schmidt's job at the Yellowstone Club is to know all the nooks and crannies of the mountain and guide members to them. Skiing with the man considered the founder of extreme skiing is just one of the perks of club membership.

Since it was founded in 1999, the Yellowstone Club has made headlines for such luxuries, provided only to its ultra-rich membership and their guests. But in recent years, public interest in the resort has turned from its exclusivity to its turmoil, most notably a messy divorce of club founders Tim and Edra Blixseth and the bankruptcy that followed.

But the two "B" words - Blixseth and bankruptcy -- so closely associated with the world's only private ski and golf community are well behind the club today, says the leader of an investment firm that helped reorganize it.

"That's old news," Sam Byrne said of the bankruptcy while lunching in the chandeliered dining room at the club's main lodge.

"There's a lot of noise out there related to the former ownership. They created an extraordinary thing here that took exceptional vision to execute. Really, I'd hope that will be the legacy of the Blixseths, as opposed to all the noise that goes on in the bankruptcy," he said.

Byrne is managing partner of CrossHarbor Capital Partners, a real estate-investment company he founded in 1993. Now, a year and half after CrossHarbor bought the bankrupt Yellowstone for $115 million, Byrne says the club is back on its feet, selling real estate at a swift clip and putting hundreds of people to work with good-paying jobs and benefits.

Among the accomplishments Byrne cited since CrossHarbor took control in July 2009 were:

 More than $8.2 million paid to contractors and other so-called "unsecured creditors" owed money when the club went bankrupt.

 More than $175 million in real estate sales as part of 51 deals consisting of undeveloped lots, single-family homes and condominiums.

 Forty news members.

 Employment for 601 people, 235 of whom work full time.

"Going through a bankruptcy and reorganization is stressful. Management transition is stressful," Byrne said. "Being on the other side of all that has made it a stable place to work and be a part of. And we feel we've been very successful at that."

Club members interviewed for this story also said they believed the club had weathered the worst of it and life at Yellowstone Club had leveled out.

That said, Tim Blixseth continues to cast a long shadow. He is still deeply involved in the club's legal matters, even if he now does his work from outside the gates.

Also outside the gates are many Montana residents still wary of a millionaires-only club in their backyard.

Tim Blixseth, street fighter

Tim Blixseth said he has no desire to retake ownership of the Yellowstone Club he founded.

"There are other people who are probably better to run it," Blixseth said, speaking by telephone from a beach property in mainland Mexico. "Some people are better dreamers than operators. I might fall into that category myself."

Still, by his own estimate, Blixseth spends about four hours a day going over Yellowstone Club legal documents and has filed numerous appeals -- sometimes acting as his own lawyer. Thus, while the club emerged from bankruptcy in 2009, the case continues to run its course in the courts.

Blixseth said his continued interest stems from charges made by his ex-wife and by CrossHarbor Capital that he caused the club to go bankrupt when he took out a giant loan in the club's name from Credit Suisse. Blixseth was accused of siphoning money from that loan to buy up extravagant properties around the world unrelated to the Montana property.

The accusations aren't true, he said, and he takes them personally.

"If you pick a fight with a street fighter, you can expect a fight," Blixseth said. "If they hadn't sued me after getting the club. ... I don't think any of this would have been going on."

Blixseth claims CrossHarbor and Edra Blixseth conspired to drive the club into bankruptcy so that the investment firm could buy it on the cheap. Bankruptcy Judge Ralph Kirscher rejected Blixseth's claims in an August ruling and has found Blixseth is responsible for repaying part of the loan.

Blixseth has since filed paperwork to oust Kirscher as the judge, saying he is personally biased against him.A hearing on that motion is scheduled for January.

Byrne wouldn't comment on Blixseth's charges. He said Kirscher's rulings speak for themselves, and seemed confident that the hardest times for the club were over.

"Many developments and private clubs around the country don't exists anymore after the economic crisis," Byrne said. Members of the Yellowstone Club "fought to survive through the bankruptcy.

"It's paying off for them."

Whitney Peyton, senior managing director at CB Richard Ellis in Minnesota and a member of the club since 2002, agreed.

When he first bought into the club, "you had to buy into a vision," Peyton said. "There weren't guardrails on the roads, no asphalt on a lot of the roads."

Things improved over the years, but as the real estate market started to falter, work around the club started to lag, he said. "Holes in the roads, no bathrooms on the golf course, stuff you could see around the club."

That's been cleaned up since reorganization, Peyton said, and the club members rallied to the cause during the reorganization.

"Membership collectively worked together through the bankruptcy process and through that process the membership camaraderie grew very strong," he said. "We were a collective one."

Outside the gates

In late December, Christmas was on full display in the Yellowstone Club's main lodge, a hulking $100 million stone-and-timber building named after ski movie pioneer Warren Miller. A red-and- green color scheme dominated the airy lobby, where families sipped on hot chocolate and munched on breakfast pastries before hitting the slopes.

The Yellowstone Club spreads across 13,500 acres of land in the Madison Mountains, about 50 miles south of Bozeman. The club has about 325 members, plus their families, and seven ski lifts service both expert chutes and gentle groomers.

The sheer existence of a ski resort reserved for the ultra-rich offends some people's sensibilities. The club has more than 2,000 acres of skiable terrain, but only members and their guests are welcome; as a result, crowded slopes and long lift lines are nonexistent.

And it has become the "private wilderness retreat" for the likes of Microsoft founder Bill Gates and former vice president Dan Quayle, who are able to maintain their privacy behind heavy security.

Byrne acknowledged that luxury and seclusion are a reality, but said the club is less ostentatious than many people make it out to be. Home prices are less expensive at the club than comparable property at many of the major resorts in Colorado, he said.

"I'm proud of what we are. There is a misperception of who the people are up here," he said. "The fact that it's a club is what makes it special."

As for the community outside the gates, Byrne said that in addition to the 600 employees, 20 homes are being built right now, a significant boon to an otherwise flagging construction industry. And, the club has raised more that $350,000 for charity since July 2009.

"We want to be a good neighbor to not only the greater Big Sky community, but to the greater-Bozeman community," he said. "We want to be recognized as a community that cares about the outside community."

Daniel Person can be reached at dperson@dailychronicle.com or 582-2665.