Grabanski works to keep farm goingFARGO, N.D. — Grafton, N.D., farmer Tom Grabanski appears to be continuing to attempt farming in at least some of his Texas areas 2011, even as former partners and lenders navigate positions among related bankruptcies. Claims and counterclaims in bankruptcy proceedings total more than $15 million, involving operations in at least three states.
By: Mikkel Pates, Agweek
FARGO, N.D. — Grafton, N.D., farmer Tom Grabanski appears to be continuing to attempt farming in at least some of his Texas areas 2011, even as former partners and lenders navigate positions among related bankruptcies. Claims and counterclaims in bankruptcy proceedings total more than $15 million, involving operations in at least three states.
Grabanski and his wife, Mari K. Grabanski, now living near Blossom, Texas, filed for Chapter 11 bankruptcy in July. A separate bankruptcy is for their Grabanski Grain Co., which had been a corn handling facility on the west side of Grafton. A third bankruptcy case now is in play involving Keeley and Grabanski Land Partnership, forced by Keeley.
Here are some recent developments in the cases:
n U.S. Bankruptcy Judge William A. Hill in Fargo, N.D., has extended deadlines to give the Tom and Mari Grabanski bankruptcy more time to file a reorganization plan, and until March 6 to gain acceptance from creditors. AgCountry Farm Credit Services, PHI Financial Services and others interview-
ed Grabanski in Grand Forks, N.D., in early December, but those transcripts so far have not been entered as court documents and so far are not public.
n The North Dakota Public Service Commission on Jan. 7 filed a request with Hill, asking to be able to move forward and administer Grabanski Grain’s $340,000 bond and to be able to offer relief to price-later grain deliverers through a state indemnity fund that has been set up and funded for that purpose. It isn’t clear how many contracts fall under that category.
- Jeff Todd, an attorney representing Colorado Farms, one of the partnerships represented by Grabanski, which included Hanson and Tallackson families in the Grafton, N.D., area, did not immediately return messages for an update on a case in which various farmers are seeking payment of the so-called GRIP corn program in 2008. The U.S. Department of Agriculture’s Risk Management Agency shut the program down because it was flawed, but, the farmers argue, the decision was improperly done mid-stream. Colorado Farms and Hanson Colorado Farms are not in bankruptcy.
- Grabanski is trying to counter former partners John and Dawn Keeley of Grafton, N.D., who had filed an involuntary bankruptcy on Keeley and Grabanski Land Partnership.
Keeley had filed the involuntary action on Dec. 6. On Jan, 10, 2010, the Grabanskis’ attorney, DeWayne A. Johnston of Grand Forks, filed a motion to dismiss the Keeleys’ involuntary bankruptcy petition. The Keeleys and Grabanskis had formed a partnership in 2006 to go farming in various places in Texas. That partnership on Feb. 5, 2007, signed a promissory note to buy a parcel of land at De Kalb, Texas, owned by Eldon and Carol Lenth.
In September 2009, Keeley and Grabanski earlier reported they had severed their partnership, somehow effective on an earlier, April 2009 date. Johnston noted that the Keeleys transferred “all ownership” in the partnership to the Grabanskis. Grabanski “agreed to assume all of the debts,” Johnston says. After September 2009, he says, the business continued only as Grabanski Land. Some of the lenders say the Keeleys are liable for debts related to the partnership.
On Feb. 1, 2010, Grabanski Land failed to make a payment to Lenth. Subsequently, Lenth set a foreclosure sale for the propert on Dec. 7, 2010. But the foreclosure sale was stopped when Lenth learned that Keeley filed the involuntary bankruptcy petition in Fargo at 6 p.m., Dec. 6.
On Dec. 16, the Keeleys filed an amended claim in the bankruptcy, asserting the partnership owed them $2.34 million. Johnston said this is “the total amount of the promissory note for the property owned by Grabanski Land in Texas which faced foreclosure.”
“In essence, Keeley is attempting to bring an action on behalf of Lenth, the holder of the promissory note, when Lenth has not sought to do so,” Johnston says, and adds, “Simply put, Keeley filed this motion to block Lenth from foreclosing on the property in order to leverage Grabanski into an agreement benefitting Keeley.”
Lenth, speaking with Agweek, describes the situation as a mess. At about age 70, he says he farmed much of his life near Elgin, Iowa. After his first wife died, he and a new wife, Carol, had started farming in Bowie County, Texas, raising corn, wheat and soybeans, while two sons continued farming in Iowa. Lenth, who winters near Orlando, Fla., says he was introduced to Grabanski and Keeley by a real estate agent. He says he wanted cash for his Texas parcel, but settled for a small down payment on 2,000 acres. The land been bringing about $500 to $800 an acre in the area at the time, and Keeley and Grabanski offered him about $1,000 an acre for it, with a balloon payment at the end of 10 years.
“The Realtor didn’t think we should sell it with hardly nothing down,” Lenth acknowledges. “We decided to do it anyway.”
Lenth describes the land as Red River bottomland. He says the Grabanski partnership farmed it from 2007 to 2010. He says some of the payments have been late, others “skipped.” He says Grabanski, since the failed foreclosure, has offered to farm it on shares, but Lenth so far has declined. Lenth says he’s suggested that some of the land might go into a federal wetland program, but he describes this as uncertain.
- Robert Fossum, a vice president of McVille (N.D.) State Bank, in bankruptcy documents described a confusion regarding the repossession of some collateral. Fossum was hired by Choice Financial Group as an independent contractor to “assist them with issues arising out of their lending relationships” with the Grabanskis and their entities, including Texas Family Farms and G&K Farms. Choice had a “blanket lien upon all machinery and equipment of G&K,” Fossum says. Grabanski and Keeley are partners in G&K.
Choice seized 65 pieces of equipment, each of which had been “previously held out to Choice as being owned by G&K, a non-bankrupt entity,” he says. Also, the debtors had listed 30 pieces of machinery and equipment that they had an ownership in. Later, John Deere informed Choice that Tom Grabanski had separate financing for some of those items, including two combines, a sprayer, two drills and other times. Choice is asking the court to order the machinery released to John Deere, but to request that John Deere reimburse Choice for the cost of repossessing them.