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Published March 01, 2011, 02:02 AM

Farmer asks for bankruptcy dismissal

FARGO, N.D. — U.S. Bankruptcy Judge William Hill heard arguments to dismiss an involuntary bankruptcy for the Keeley and Grabanski Land Partnership of Grafton, N.D., but says he will take an unspecified time to decide the issue.

By: Mikkel Pates, Agweek

FARGO, N.D. — U.S. Bankruptcy Judge William Hill heard arguments to dismiss an involuntary bankruptcy for the Keeley and Grabanski Land Partnership of Grafton, N.D., but says he will take an unspecified time to decide the issue.

Hill, in a Feb. 24 hearing in Fargo, N.D., also denied a motion to appoint an operating trustee to manage farmland the partnership owns in Texas, but says he might reconsider that later, after he decides whether the bankruptcy survives.

John and Dawn Keeley filed the involuntary bankruptcy petition on the land company managed by Tom Grabanski, in which the Keeleys once were partners. All are from Grafton, N.D. The partnership is just one piece in a complicated network of farming operations and loans that are involved in three separate bankruptcies, including hundreds of creditors, several partnerships, tens of millions in debts and accusations of fraud.

Hill — for now — denied the Keeleys’ motion to appoint an “operating trustee” to manage the Keeley and Grabanski Land farm interests. Hill says he finds it “gets pretty expensive, pretty quick” to hire such a trustee, but Kenneth Corey-Edstrom, the Keeleys’ lawyer from Minneapolis, says it “can’t be more expensive than letting Mr. Grabanski run and sell the farm.”

Case background

A bit of background: The Keeleys and Grabanskis had farmed together in 2006 and 2007. The Keeleys and Grabanskis in 2008 formed Keeley and Grabanski Land Partnership to own farmland in Texas. They also formed a separate farming company to doing farming and leasing the land from the land partnership.

The land partnership purchased property in the Blossom and De Kalb, Texas, areas, and farmed in 2008 and 2009. The Keeleys and Grabanskis dissolved the land partnership in late 2009, effective April 1, 2009, but Grabanski continued the business.

In July 2010, Tom Grabanski and his wife, Mari, filed Chapter 11 bankruptcy, in which the Keeleys are listed as creditors. At the same time, the Grabanskis also filed a separate bankruptcy on their Grabanski Grain Co., an elevator in Grafton.

In December, the Keeleys filed an involuntary bankruptcy petition on their former land partnership with the Grabanskis, saying they are being held responsible for debts associated with it, and are creditors for that partnership, though they thought the partnership dissolved.

Corey-Edstrom says Grabanski had failed to protest the involuntary bankruptcy before a bankruptcy deadline, so his objections should be barred. DeWayne Johnston, The Grabanskis’ lawyer from Grand Forks, N.D., says he took more time because he was doing “research,” which Corey-Edstrom argued is not a valid excuse.

Similar claims

Johnston argued the Keeleys had filed similar claims in the Grabanskis’ individual bankruptcy, and couldn’t take “a second bite from the apple.” He argued that the debt in the Texas farmland partnership “doesn’t exist” because the “collateral is worth more than the debt.”

Corey-Edstrom says the Keeleys want an operating trustee because “nobody trusts Mr. Grabanski” to farm profitably, or to operate on behalf of creditors.” They say he has “frustrated” efforts of a Texas land broker to sell or trade land to satisfy debts. In the past three years of operating, Grabanski “hasn’t made a dime,” Corey-Edstrom says. In 2008, they lost $2.5 million despite crop insurance and high corn prices.

In 2010, Johnston said Choice Financial, a Grafton-based banking company, had seized Grabanski’s equipment in Texas that would have been used to harvest at Blossom, Texas, and left some crop “rotting in the field” in 2010.

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