The Yellowstone Club, the ultra-exclusive private club in Big Sky, Mont., filed for Chapter 11 bankruptcy protection yesterday. In a letter to club members, owner Edra Blixseth, who assumed control over the club this summer as part of a divorce settlement with her husband Tim, explained that the club’s plan to sell the assets of the destination club venture, Yellowstone Club World, had failed.

“I have been working feverishly to remedy Yellowstone Club’s capital and liquidity situation for some time. My focus after taking over the club was to complete the sale of YC World assets that would bring significant capital into Yellowstone Club,” said Blixseth in a letter to club members. The sale of Yellowstone Club World assets was expected to be completed in September, with proceeds used to pay off debts and provide a cash infusion. Blixseth said she expected that the Yellowstone Club would then secure $100 million in private equity dollars. She cited “the rapid deterioration of the financial and credit markets” as one reason for the bankruptcy filing.

Yellowstone Club secured several million dollars worth of debtor-in-possession financing, a loan that is extended to companies in Chapter 11, to allow club operations to continue. The club, which maintains a private ski resort in Big Sky where members own multi-acre homesites and multimillion-dollar residences, will open for the winter season in early December.

The bankruptcy filing caps a wild year for Yellowstone Club, an ultra-luxury vacation club that counts Bill Gates among its members. Prior to the final divorce settlement, the Blixseths had planned to sell Yellowstone Club to a private equity firm, but the deal fell apart in the spring. A lawsuit from a group of investors, including Greg LeMond, and an increasingly public divorce battle between the Blixseths, only added to the turmoil and the media attention.

This latest filing by Yellowstone Club is just one sign that the current economic climate is impacting destination clubs. Last month, High Country Club announced a reorganization that will slash the number of homes in its real estate portfolio and increase membership dues. The plan is contingent on member approval, and a vote is slated to take place this week. If the plan does not pass, the club could cease operations according to High Country Club executives.