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Published February 15, 2011, 11:44 AM

April a busy month for Grabanski case

FARGO, N.D. — There are a couple of February hearings, but April appears to be a big month for bankruptcy cases involving Tom and Mari Grabanski, a Grafton, N.D., farm couple who farmed in Texas and Colorado under various names and entities.

By: Mikkel Pates, Agweek

FARGO, N.D. — There are a couple of February hearings, but April appears to be a big month for bankruptcy cases involving Tom and Mari Grabanski, a Grafton, N.D., farm couple who farmed in Texas and Colorado under various names and entities.

There are three separate Chapter 11 bankruptcies, some involving strong charges of improprieties regarding the Grabanskis’ handling of funds and commodities Each of the main cases has its own schedule. The related adversary actions are separate suits, but have their own schedules.

Case schedule

Here are schedules of what’s going on, with case numbers listed:.

CASE I (NO. 10-30902 ) —Thomas and Mari Grabanski and Mari Grabanski, individually, aka MTM Farms, a partnerships, and G&K Farms, a partnership. Grabanski has proposed a stipulation agreement to sell some Walsh County, N.D., land in an attempt to satisfy loans and guarantees of $5.2 million. The Grabanski families propose that some land that had been in the Grabanski family for 100 years will be transferred to Merlyn and Dolores Grabanski “save for AgCountry’s first priority mortgage and Choice Financial’s second priority morgate interest,” and that Merlyn and Dolores would exchange their ownership in other land. John and Dawn Keeley, partners with the Grabanskis in some of their farming, have objected, saying there’s no evidence the traded land has equal value.

In a Feb. 2 proposal, Merlyn and Dolores Grabanski said they’ve made a deal with AgCountry Farm Credit Services to have Steve Eckman of Grafton sell auction some of their mortgaged land to satisfy debt, to keep some land that has been in the family for 100 years.

The Keeleys objected Feb. 8, arguing there is no verification the land being traded is of equal value. The court set a hearing on Feb. 9, but the Keeleys withdrew their objection to the land sale on the eve of the hearing, so the hearing was canceled.

Adversary actions

Adversary actions in the above case, each effectively its own case on its own schedule:

n Colorado Farms (10-07023) — Several plaintiff partners, including the Hansons, Tallacksons vs. Tom and Mari Grabanski, filed Aug. 27, 2010. The plaintiffs allege Grabanski and others diverted assets for the benefit of defendants. Because of alleging things such as “fraud, deceit and civil conspiracy.” Some of the grain buyers have objected, saying it had no contract with the plaintiffs, but simply were buying grain. Trial is set for Oct. 3.

n AgCountry Farm Credit Services (10-07031) — The lender alleges Grabanski fraudulently sold crops in Colorado, Nebraska and Manitoba that were pledged to AgCountry as loan collateral on loans that were in default in April 2009. AgCountry ask its debts to be non dischargeable. Trial is set for 9:30 a.m. April, 12.

n Crop Production Services (10-07033) — The company contracted with G&K Farms of Feb. 7, 2008, and claims Grabanski represented that G&K Farms had been in business 20 years, had a net worth of $12.2 million and owned $19 million in real estate. Among other things, they say farm inputs they financed were used on other farms, and that they are owed $1.04 million. Trial is set for 9:30 a.m. April 19.

n PHI Financial (10-07034) — PHI says Grabanski and five other entities entered loans of $7 million, based on July 2008 statements that Grabanski’s net worth was about $20.8 million, including G&K Farms land of $14.2 million. Later, they said G&K never owned property. Trial is set for April 21 in Fargo, N.D.

n Keeleys (10-07035) — John Keeley alleges in their farming partnership with Grabanski, they required each other’s signatures on decisions involving more than $1,000. In 2008, they obtained financing from Choice Financial. Among other things, they say Grabanski executed a line of credit with PHI Services Inc. Trial is set for 9:30 a.m. April 25.

CASE II — Grabanski Grain (10-030924), filed July 22, 2010, assets of $1 million to $10 million and debts at $10 million to $50 million. Largest unsecured claims: John Warcup, Grand Forks, N.D., attorney, $1.01 million; and PHI Financial, 3.7 million. The grain company had until Jan. 7 to file a reorganization plan, but none was filed. Secured debts include AgCountry, $2.1 million and PHI Financial Services Inc.

There is one adversary case here:

n AgCountry (10-30932) — AgCountry Farm Credit Services filed Nov. 9, 2010, to saying the Grabanski debt should not be discharged. The lender’s claims include loans from 2007, 2008 and 2009. Starting in April 2009, AgCountry claims Grabanski sold grain that was collateral, some of it to Canada, and willfully concealed more than $2 million in sales, and still owes AgCountry $1.5 million. A hearing is scheduled April 12.

CASE III — Keeley and Grabanski Land Partnership (10-31482). Filed Dec. 6, 2010, this is an involuntary petition by John and Dawn Keeley to push their partnership — Keeley and Grabanski Land Partnership — into bankruptcy. The Keeleys claim $2.34 million in debts, related to Lenth land in Texas. The Grabanskis asked for dismissal on grounds that no partnership exists.

Texas land case

In the Keeley documents, there are new insights on Lenth land, near

DeKalb, Texas.

The Keeleys say that on July 7, 2010, the partnership received a letter from USDA’s Natural Resource Conservation Service, saying NRCS was prepared to offer to purchase a conservation easement on the Lenth land for the Wetlands Reserve Program.

The NRCS offered $2.56 million for the purchase of a permanent easement on 1,972 acres of Lenth land. The Keeley action stopped the foreclosure sale of property, which was supposed to have happened Dec. 7.

“On information and belief, the Grabanskis have been trying to have the WRP funds turned over to Melvyn Grabanski, Tom Grabanski’s father,” the Keeleys say in the complaint. “Melvyn was a guarantor on many of the loans obtained by the Grabanskis, and may have been involved in fronting some of the money for the purchase of the Lenth Land, the Unruh Land (near Blossom, Texas), or other parcels owned by the partnership. However, under the Lenth Deed of Trust, the money for the purchase of the permanent easement under the WRP should go to the Lenths.”

The Grabanskis say the Keeleys ended their partnership involvement, but the Keeleys say they still seem to be involved in a partnership they thought they ended in September 2009, effective in April 2009. Nevertheless, on April 12, 2010, the Keeleys say, they were served with a PHI Financial summons, saying they were liable for more nearly $7.3 million in debts from the partnership. They have asked for information from the debtors, and have asked for a trustee appointee to be named. A hearing had been scheduled Feb. 16, but the Keeleys’ lawyer has a conflict, so the case may be rescheduled.