Reality Check for the World's Rich

June 16, 2009— -- All good things must come to an end -- even for America's jet-setting super rich .

That was certainly true for the Yellowstone Club and its owner, 55-year-old Edra Blixseth, who filed for Chapter 11 bankruptcy protection earlier this year to hold off more than 100 creditors to whom she owed at least $141 million.

Yellowstone Club, a posh club in Big Sky, Mont., for the super rich with a 13,600-acre private ski resort, was originally the venture of American billionaire Tim Blixseth, Edra's former husband. The Blixseths ran the club as a team from 1997 until they finalized their divorce last year.

The Blixseths' situation is "an extreme example of what's happening with the wealthy these days," Robert Frank, author of "Richistan" and senior special writer for The Wall Street Journal, told ABC News. "Not many have gone from billionaire to bankrupt ... but the wealthy are losing unprecedented amounts of money."

The couple's problems allegedly began in 2005 when Tim Blixseth obtained a $375 million bank loan from Credit Suisse by guaranteeing the club's income as payback money.

But, according to bankruptcy court documents, much of that loan instead went to create Yellowstone Club World -- a chain of exotic worldwide resorts in France, Scotland, Mexico and on the Caribbean islands. That was Blixseth's dream.

"So much of the wealth is built on borrowed money," Frank said, noting that the Blixseths' situation is indicative of the trends among the wealthy during this financial crisis. "It's all a lot of smoke and mirrors.

"The wealthy have been using leverage and debt to inflate their lifestyle and businesses," said Frank, who looked through many of the Blixseths' financial records. "We are now seeing what happens when the debt dries up."

Credit Suisse still wants to collect a part of this sum and Tim Blixseth has been protected so far because his wife took over the debt from Yellowstone Club in the divorce proceedings.

When Extreme Wealth Crumbles

In a press release, Tim Blixseth sought to set the record straight, regarding the dissolution of his marriage and his wife's spending habits.

Blixseth claims that his ex-wife had been "recklessly spending money as if it grows on trees," and hosted a lavish $90,000 "divorce celebration party," where she allegedly sought to demonize him. At the party, Blixseth says that guests were given voodoo dolls resembling him and toilet paper with his photograph as party favors.

In 2007, Tim Blixseth gave Chris Connelly of "20/20" a personal tour of the chateau he owned at the time in France.

Houses don't come much bigger than the 700-year-old French chateau, located 45 minutes outside of Paris. It boasted rooms full of extravagant furnishings, like a $20,000 bed, a courtyard with Old World grandeur, a medieval chapel, and some modern amenities, too, like a spa.

Blixseth made more than a billion dollars in timber and real estate -- yet, he flinched when anyone called him rich.

"It's a connotation to me, like snooty, arrogant, nose in the air, and 'Oh, they're rich,'" he told "20/20" in 2007. "I don't like rude rich people who [don't] treat the working class with respect."

Born a "welfare kid," Blixseth endured the insults of fellow students back in Oregon.

"When you had hot lunches at school," Blixseth explained, "they'd say 'welfare kids get over there,' and the rest of the kids would start heckling us; and that was really, really degrading."

But revenge would be his.

"Later on in life, the school district sold that school, and I bought it," he said in 2007. "I walked past that counter, where I'd get those lunches. And that was the 'yeah, baby!'"

Blixseth could once celebrate just about anywhere he felt like it: aboard one of his yachts, on one of his private jets, on his private island in the Caribbean, at his ski and golf spot in Montana, or at that place in the sun in Mexico.

A spokesman for Tim Blixseth told ABC News that since his 2007 interview with "20/20," "he turned over the exclusive Yellowstone Club resort to his ex-wife as part of their divorce Agreement. She promptly drove it into bankruptcy, and then also declared personal bankruptcy. Tim is hopeful that the bankruptcy judge sitting in Montana will agree...to bring in an unbiased trustee to liquidate her assets, so all her creditors start getting paid."

Blixseth has remained involved in a host of charitiesand is "grateful for all of life's blessings, especially now during the worst financial crisis in our lifetime, when so many Americans are struggling."

Edra's attorneys did not respond to requests for comment.