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Published July 30, 2013, 11:38 AM

Grabanski stops sale of his ND assets by filing Chapter 7 bankruptcy

Farmer Tom Grabanski has at least temporarily stopped a courthouse sale of his Grafton, N.D., home, as well as several other area properties, by filing Chapter 7 bankruptcy. The auction had been scheduled for July 30.

By: Mikkel Pates, Agweek

GRAFTON, N.D. — Farmer Tom Grabanski has at least temporarily stopped a courthouse sale of his Grafton, N.D., home, as well as several other area properties, by filing Chapter 7 bankruptcy. The auction had been scheduled for July 30.

After losing Chapter 11 bankruptcy protection, Grabanski and his wife, Mari, filed Chapter 7 bankruptcy July 29 in Texas, where they now live.

In the bankruptcy petition, the Grabanskis indicate $10 million to $50 million in assets and $1 million to $10 million in debts, along with 50 to 99 creditors. They are represented by Vickie L. Driver of the Coffin and Driver firm in Dallas.

Tom Grabanski didn’t immediately respond to a request for comment from Agweek.

The Grabanskis, originally of Grafton, farmed with an assortment of partners in Texas and then Colorado, starting in 2007. Some of their Colorado farms suffered from drought and the partners ran into a dispute with the U.S. Department of Agriculture’s Risk Management Agency over whether they should receive crop insurance for corn they did not irrigate.

Their partnerships eventually won those claims over GRIP insurance. But disputes with former partners, lenders and customers of a Grafton grain elevator the Grabanskis owned landed them in court, with allegations of fraud.

Dismissed Chapter 11

Tom and Mari Grabanski filed a personal Chapter 11 bankruptcy reorganization in July 2010. That case was dismissed April 12, 2013 by Judge Thad J. Collins in U.S. Bankruptcy Court in Fargo, N.D. Their former lawyer, DeWayne Johnston of Grand Forks, N.D., is facing litigation over conflict-of-interest issues for his legal work involving various parties in the cases.

With the Chapter 11 bankruptcy protection gone, Horse Creek Farms, a creditor group from Colorado, pursued a sheriff’s sale of five Grabanski properties in Grafton, to satisfy a $1 million 2010 judgment in Walsh County District Court.

Judge Collins’ order prohibited the Grabanskis from filing another Chapter 11 petition for 180 days but didn’t specifically prohibit Chapter 7.

Walsh County Deputy Sheriff Jim Kosmatka told Agweek an hour before the asset sale was to begin July 30 that the sale had been postponed until Aug. 2 at 10 a.m.

“There are some questions that need to be addressed” before the sale can go forward, Kosmatka says.

The parcels total nearly $229,000 in “true and full” value, according to Grafton and Walsh county tax sources. They include two homes, including a former residence of the Grabanskis, valued at $180,500. Other parcels include a $41,500 house on three lots, various lots in town and one 5.6-acre parcel located 10 miles east and four miles south of Grafton, assessed at a productive value of $3,400.

Dennis Esch, who manages the Horse Creek Farms group, says the suit defendant originally was Colorado Farms, a North Dakota general partnership. It includes Thomas and Mari Grabanski, James and Carol Tallackson, Brian Ranell, and Jeffrey and Amanda Hanson, individually and as partners. The Hansons, Tallacksons and Warcup repeatedly have declined to comment to Agweek on the matter.

Grabanski didn’t pay his debt to Horse Creek Farms, Esch says, adding that the other defendants have paid in full.

Esch declined to specify when the Hansons and Tallacksons paid off their debt to Horse Creek Farms, or how much. Esch says his family has since resumed management of the Colorado farming operation, and that he was surprised by the Chapter 7 filing. He says he thought the prohibition against refiling bankruptcy would include Chapter 7.

He says creditors endured the “ultimate in frustration in dealing with the bankruptcy courts.” He says the court should have thrown the case out within a few months because Grabanski didn’t appear to live up to filing financial schedules on time, or completely.

“The bankruptcy courts never required him to abide by the rules,” Esch says. “At least with Chapter 7, it’ll be over.”

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