Grabanski appears at Fargo hearingFARGO, N.D. — Tom Grabanski, the embattled Grafton, N.D., farmer who is mired in three separate Chapter 11 bankruptcy cases and allegations of fraud in Texas and North Dakota dealings, says he just wants to “move on and pay my bills.”
By: Mikkel Pates, Agweek
FARGO, N.D. — Tom Grabanski, the embattled Grafton, N.D., farmer who is mired in three separate Chapter 11 bankruptcy cases and allegations of fraud in Texas and North Dakota dealings, says he just wants to “move on and pay my bills.”
Grabanski appeared in court but did not testify in an April 19 hearing in Fargo, N.D., involving the bankruptcy of involving himself and wife, Mari. The couple, who last year moved to Blossom, Texas, where they live on a farm that controls on contract-for-deed purchases that are in default.
Grabanski tells Agweek he’d like to tell his side of the story.
“It’ll all come out eventually,” Grabanski says.
Grabanski’s story has attracted wide interest because of its multistate scope and the number of partners and creditors involved as well as interactions with crop insurance programs.
In the April 19 hearing, Roger Minch, an attorney for Crop Production Services Corp. asked a bankruptcy judge William A. Hill for a money judgment to make sure CPS always can collect its full $777,581 debt, even if the case emerges from bankruptcy protection.
Reason: CPS says Grabanksi provided false financial statements that CPS used to extend the credit. Minch said there should be “no excuse” for Grabanski’s false financial statements and projections because, if anything, farmland values have been increased.
Minch said CPS trusted Grabanski because CPS successfully had extended crop input credit individually to Grabanski, his father Melvyn, and to partner John Keeley, from 2004 to 2008. He said trouble started in 2009 when Melvyn dropped out of the picture and Tom Grabanski and Keeley started their partnerships, involving farming and land.
Vance Stroebel, CPS credit manager from Flower Mount, Texas, testified that Grabanski’s financial statements showed that he and his partnerships in January 2009 owned $19 million in land and $1.4 million in equipment. Tom Grabanski in May 2009 said he had personal net worth of nearly $9 million and that the partnership had a positive cash position and a $4.4 million in revolving line of credit from Choice Financial bank based in Grafton.
Based on this, CPS extended more than $1 million in crop input credit to Grabanski’s partnerships on “crop terms,” or 60 days from shipment, but the payment would come after the crop was harvested.
Johnston said Grabanski had “no intent to defraud” anyone, was a victim of “larger market forces” and intended to repay creditors and, “in fact, he still will.”
He questioned whether Stroebel phoned Grabanski to verify financial statements that were not signed, or simply “assumed” the records, which a CPS salesman told Stroebel he’d acquired from Grabanski, actually came from Grabanski. Minch said Grabanski testified earlier that he’d provided the statements to CPS.
Stroebel said he recommended cutting off further credit on March 10, 2009, Grabanski when he couldn’t interest Pro Partners, a third party Farm Credit Services entity, to help finance the deal. Stroebel said he’s been in the ag lending and analysis business since 1982 and the Grabanski case is his first “big loss” he’s had in his career.
Here is a summary of recent actions involving the three main Chapter 11 reorganization cases:
CASE I — Hill has threatened to throw the primary individual bankruptcy of Thomas and Mari Grabanski out of court because Grabanski has failed to make deadlines. In separate, related lawsuits, the Grabanskis face several “adversarial” lawsuits, filed by certain creditors. Those include the CPS case, as well as AgCountry Farm Credit Services, $1.5 million and PHI Financial, $7.4 million.
Hill, after a March 30 hearing, denied a motion by Tom and Mari Grabanski to extend a period to gain required creditor acceptance for a bankruptcy reorganization plan that is itself overdue and has not been filed. April 1, Hill warned that if the plan wasn’t filed in 15 days, he’d dismiss the bankruptcy. April 8, Grabanski asked Hill to reconsider the request for more time because of potential “extreme and unexpected hardship.” April 11, Hill denied that request, too.
April 14, Grabanski asked Hill to “stay” his April 1 decision because they intend to appeal it to the 8th Circuit bankruptcy appellate panel. April 15, Hill denied the stay.
Here is the status of related “adversary” actions, or lawsuits connected to main case. The bullet items list the plaintiffs and their status:
n AgCountry FCS of Fargo. April 15, Grabanski asked Hill for a “summary judgment” to pay AgCountry to satisfy loans that went into default in April 2009. A May 17 hearing is scheduled on the case.
n Crop Production Services, a wholly owned subsidiary of Agrium, after the April 19 hearing. Hill said he’d make a decision in 30 days.
n PHI Financial Services, in its $7.4 million case, is scheduled for trial Sept. 22.
n John and Dawn Keeley, farmers and former farming partners from Grafton, N.D., will wait until a scheduled to start Oct. 24.
n Crop Production Services, filed a case against the Keeleys March 3, 2011, and the Keeleys March 23 filed a cross-claimed against Grabanski.
CASE II — Grabanski Grain. This case, filed July 22, 2010, is the grain elevator in Grafton, N.D., went insolvent and now is under new, solvent management. The company lists $100,229 in assets and $2.9 million in liabilities, including $2.1 million in secured claims, $629,738 in unsecured priority claims and $125,570 in unsecured nonpriority claims. Largest nonsecured priority claims are JP Farms, Grafton, $225,000 and Sproule Farms, Grand Forks, N.D., $143,640. No hearing is scheduled.
CASE III — Keeley and Grabanski Land Partnership. This case was filed Dec. 6, 2010, by John and Dawn Keeley, to force the partnership they had with the Grabanskis into bankruptcy. The Keeleys claim $2.34 million in debts related to Texas land near DeKalb and Blossom, Texas. Among other things, the Keeleys say that Grabanski, as “debtor-in-possession” had failed to act on a purchase offer on the Lenth land, and a trustee would have accepted it. The Grabanskis objected, saying the Keeleys were trying to “liquidate the alleged bankruptcy estate” because they “anticipate some recovery.
April 1, Hill approved the appointment of an operating trustee. April 5, Hill he named Kip Kaler as trustee. April 15, Grabanski appealed the April 1 decision.