Home   Federal Cases   State Cases   News   Search   Cart   Log In 
 
Search 591,339 Cases and Articles on TJV!
 
Federal Case Categories







In re Keeley and Grabanski Land Partnership

Case No. 11-6020 (C.A. 8, Sep. 6, 2011)

Debtor Keeley and Grabanski Land Partnership appeals from the Order of the Bankruptcy Court appointing a trustee in its involuntary Chapter 11 case. For the reasons that follow, the Bankruptcy Court’s Order is AFFIRMED.

FACTUAL BACKGROUND



This appeal relates to one of two separate, but related, bankruptcy cases. The first case was a voluntary Chapter 11 case filed by Thomas and Mari Grabanski on July 22, 2010. The second case – the one particularly involved here – was an involuntary Chapter 11 case filed by John and Dawn Keeley on December 7, 2010, against the Keeley and Grabanski Land Partnership, in which the Keeleys and Grabanskis were partners. This appeal involves the appointment of a trustee in the partnership’s involuntary case. However, since the decision to appoint the trustee was based in part on Thomas Grabanski’s conduct in his individual case, we discuss the background of both cases here.

Pre-Bankruptcy Factual Background



Thomas and Mari Grabanski are farmers living in North Dakota who own and operate several farms and other agricultural businesses. John and Dawn Keeley are also farmers living in North Dakota. On February 1, 2007, the Keeleys and Grabanskis formed a partnership, the Keeley and Grabanski Land Partnership (“KGLP”). Thomas Grabanski and John Keeley were the managing partners. Thereafter, KGLP purchased several tracts of farmland, including two large tracts in Texas referred to by the parties as the “Lenth Parcel” and the “Unruh Parcel,” both of which are subject to seller-financed mortgages.

On January 1, 2008, the Keeleys and Grabanskis formed G&K Farms, a partnership which would rent farmland owned by KGLP. KGLP was to use the rents paid by G&K Farms to make the payments on the notes secured by the land. In order to conduct its farming operation in 2008, G&K Farms obtained financing from Choice Financial, which required G&K Farms to provide a blanket lien on its property, including crops. In addition, in connection with an extension of this note, Choice Financial later obtained second mortgages on the Lenth and Unruh Parcels as security for G&K Farms’ debt. G&K Farms also obtained credit from United Agri Products in February 2008, to pay for fertilizer for its farming operations.
 

 

Judge(s): Arthur Federman
Jurisdiction: U.S. Court of Appeals, Eighth Circuit
Related Categories: Agriculture , Business Organizations , Finance / Banking , Property
 
Circuit Court Judge(s)
Arthur Federman
Elizabeth Nail
Barry Schermer

 
Trial Court Judge(s)
William Hill

 
Appellant Lawyer(s) Appellant Law Firm(s)
DeWayne Johnston Law Office

 
Appellee Lawyer(s) Appellee Law Firm(s)
Lowell Bottrell Anderson & Bottrell
John Dwyer Kennelly & O'Keeffe
Christopher Kennelly Kennelly & O'Keeffe
Timothy O'Keeffe Kennelly & O'Keeffe
Kenneth Corey-Edstorm Larkin Hoffman Daly & Lindgren Ltd
L. Kathleen Harrell-Latham Larkin Hoffman Daly & Lindgren Ltd

 

CUSTOM EMAIL ALERTS!

With your FREE registration, you can select an unlimited number of Alert categories for daily, weekly or monthly deliveries of the Federal and State Cases most relevant
to you!

Click Here to sign up.

 



Click the maroon box above for a formatted PDF of the decision.
along in a meaningful manner. and, given the numerous lawsuits and adversary negotiate or file a plan; had failed to produce fundamental facts and information; had district of north dakota. disclosurestatement,thegrabanskisfileda"planofdebtors-in-possessionregarding seeking the appointment of a chapter 11 trustee is preponderance of the evidence. united states bankruptcy appellate panel 2011, kglp moved to dismiss the case, asserting, inter alia, that the keeleys were no the transaction. however, on or about march 18, 2011, thomas grabanski and related other interests of the estate."25 and other actions against them, the grabanskis will have to focus their attention on orders directing the grabanskis to surrender agcountry's collateral, which included in addition, creditors choice financial group and earl and lenita unruh joined the which is why kglp transferred partnership assets, crop proceeds, and crop insurance for his own benefit 19 managing member, refused to accept what mr. flournoy, kglp's own marketing lenth and unruh properties and, indeed, the keeleys filed this case to stop a grabanski informed them in 2008 that g&k farms had sustained a $2.5 million another lender, agcountry farm credit services, agcountry obtained state court standard for the denial of discharge based on a debtor's fraud, it should likewise be motion of agcountry farm credit services pca for relief from automatic stay." because the grabanskis were unduly delaying the administration of kglp's estate. debts. as stated, under the transfer agreement, the grabanskis had agreed to satisfy three other creditors joined that motion. the grabanskis requested an extension of continued the rule 2004 exams of thomas grabanski and ms. tibert for 14-day or misconduct. consequently, we conclude that the proper standard for a party for filing a plan and soliciting its acceptance. the grabanskis alleged, among other also filed an adversary proceeding alleging that thomas grabanski fraudulently colo. 1990). and creditors in present management; and (4) the benefits derived by appointment of appointment of chapter 11 trustee the united states trustee joined in the motion for appointment of a trustee keeleys, u.s. farming was a reputable company with the wherewithal to accomplish security holders, and other interests of the estate, without regard its offer to include $250,000 in earnest money for each parcel. according to the as stated above, on december 6, 2010, thekeeleysfiledaninvoluntarypetition zahn, 526 f.3d 1140 (8th cir. 2008) (holding that an order denying confirmation support the loan payments on kglp's land obligations, strongly suggests for g&k farms. asbestos claimants v. g­i holdings, inc. (in re g­i holdings, inc.), 385 f.3d 313, went. considerations include the materiality of any misconduct, the keeley and grabanski land partnership * appeal from the united states we agree: if a preponderance of the evidence standard is a sufficient among the factors courts consider in determining on february 3, 2011, the keeleys moved for the appointment of an operating since the record supports a finding of cause under § 1104(a)(1), and that the 3 1999)). fraud and, indeed, several creditors filed adversary proceedings in that case. kglp thomas grabanski. the nrcs was prepared to offer $2,563,000 for the purchase of a conservation assert that grabanski falsely told them that he signed this note personally, rather than this appeal relates to one of two separate, but related, bankruptcy cases. the professionals that they were unable to competently take part in rule 2004 things, that they were working on a settlement with agcountry that would free up _______________ demonstrated why the farms reported operating losses. they also alleged that several keeleys to renew the motion at a later time. * 11 u.s.c. § 1104(a)(2). this time, in addition to the allegations of fraud and misconduct cited before, the contention that he is suffering from depression and stress, it was reasonable to to be any more important than a chapter 7 debtor's interest in receiving a discharge 2 five days after kglp received the offer letter from the nrcs, the lenths sent of his debts.20 498 u.s. 279, 111 s.ct. 654, 112 l.ed.2d 755 (1991). he could not borrow more than $1,000 without keeley's permission. the keeleys in re bellevue place assocs., 171 b.r. 615, 623 (bankr. n.d. ill. 1994). a debtor has an interest in discharge sufficient to require a heightened interest in both g&k farms and kglp to the grabanskis. on september 24, 2009, $800,000. further, the keeleys allege that despite cash flow projections which keeleys, as creditors, initiated this case by filing an involuntary bankruptcy petition a plan and disclosure statement no later than january 26 as a condition for continuing 18 havepreviouslyheldthatadebtorhasnoconstitutionalor"fundamental" of g&k farms as a co-borrower, despite a provision in the operating agreement that purpose of liquidating a debtor's assets, pointing out that liquidation is omitted from 22 by separate order, we are dismissing that appeal because the order on march 6, 2011, the grabanskis filed a "motion to extend period for debtors which are subject to seller-financed mortgages. dismissal. on july 8, 2011, the bankruptcy court denied the motion to dismiss, on of a plan, without dismissal of the case, is not an appealable final order). thisstandardisapplicableincivilactionsbetweenprivatelitigantsunless 8 on march 22, 2011, the keeleys filed a second motion to appoint a trustee. appointing a trustee in its involuntary chapter 11 case. for the enter upon the land for harvest. on march 10, 2011, u.s. farming allegedly revised filed formal requests for extension of the exams, asserting that both ms. tibert and the grabanskis (1) had no plan for which to solicit acceptances, (2) had not filed a appointment of a trustee is in the interests of creditors and the estate under § appear, engaging in self-dealing. 7 from u.s. farming.9 5 order on february 25, 2011, denying the motion, but expressly authorizing the million in secured financing from phi services, inc., on behalf of g&k farms and of those creditors is phi financial, inc., which asserts a debt of over $7.2 million on d. conn. 1999) (holding that, following grogan v. garner, the appropriate 6 the partnership case as to the partnership which is the debtor here, kglp, the keeleys claim to be 9 partnership * against kglp to stop a foreclosure on the lenth parcel. when no answer was filed, specifically considered the standard of proof required in a bankruptcy case. there, the to remain in possession."13 of a trustee involves costs, but the evidence suggests that the benefits from the err in finding that the appointment of a trustee is in the interests of creditors and the keeleys' goal here is to cash out equity from kglp's texas land, even though the 1104(a)(2), the appointment of the trustee was mandatory. the bankruptcy court's debtor is also delinquent on the 2010 real estate taxes, as well as an obligation to argued that "favorable resolutions with secured creditors are in reality a condition 15 particularly wide discretion to appoint a trustee under the flexible standard of § 11 staying that contempt hearing. grabanski has proven himself unable or unwilling to move his own individual case the third circuit, in re sharon steel corp.,16 motion. the lenths opposed the motion, essentially because there was a pending parcels. despite farming the land, texas family farms allegedly did not pay rent to partnership which would rent farmland owned by kglp. kglp was to use the rents was not clearly erroneous in finding that cause existed to appoint a trustee under § "particularly important individual interests or rights are at stake." we the united states trustee, the keeleys, and other creditors6 including crops. in addition, in connection with an extension of this note, choice order staying the rule 2004 exam indefinitely because he was suffering from thomas grabanski or ms. tibert was too sick to attend. ultimately, the grabanskis extend the exclusivity period and ordered that, unless a plan and disclosure statement the bankruptcy court entered an order for relief on january 7, 2011. on january 10, the honorable william a. hill, united states bankruptcy judge for the that section requires that a request for an extension of the exclusivity refused to testify in good faith at the rule 2004 examination; had not shown that they 19 all partnership debts. nevertheless, several creditors of those partnerships sued the (citing adams v. marwil (in re bayou group, llc), 564 f.3d 541, 546 (2d cir. kglp's own real estate agent essentially testified that he has lost confidence in id. (citing official comm. of unsecured creditors of cybergenics corp. operating loss, despite the fact that the crops had been insured. the keeleys assert john keeley; dawn keeley; * direction of thomas grabanski; and the evidence suggests that the business 13 parcel under a lease to purchase agreement. irrigation finance solutions is a notice to kglp on july 12, 2010, stating that it was in default under its promissory transfer partnership property to thomas grabanski's father, merlin grabanski. on plan. in addition, the grabanskis were attempting to obtain a de facto extension of the showed that texas family farms would be able to raise $2.3 million from crop sales events in the bankruptcy cases the keeleys assert that, in 2010, the grabanskis abandoned g&k farms and those courts rely largely on a prior decision of 26 denying the extension of the exclusivity period is not a final order. see in re violation of § 1121(d)(1) of the bankruptcy code.7 on january 1, 2008, the keeleys and grabanskis formed g&k farms, a were paying bills when they come due; and had failed to file required monthly schedules c and d or a statement of financial affairs until a week later. according in re veblen west dairy, 434 b.r. at 553. lenths also stated that, although the keeleys were saying there was an offer on the involuntary chapter 11 case filed by john and dawn keeley on december 7, 2010, debtor keeley and grabanski land partnership appeals from the order of the asserts, the keeleys seek a pecuniary benefit. in other words, kglp asserts that the thomas grabanski testified at his 2004 exam that one louis slominski, 18 tibert, submit to a rule 2004 exam. according to agcountry, the grabanskis made operate several farms and other agricultural businesses. john and dawn keeley are exists for the appointment of a trustee under § 1104(a)(1).21 trustee is kglp's refusal to accept purchase offers on its land, from which, kglp moreover, even putting the allegations of fraud aside, the bankruptcy court's agcountry asserted that ms. tibert participated in the conspiracy to effectively perform their duties as principals in the kglp case. also to harvest crops. the grabanskis and agcountry resolved that dispute by received was insufficient to service the outstanding debt on the property. 3 objected, arguing motion to dismiss the case, and they preferred to proceed with their foreclosure. the in re grabanski grain llc, no. 10-30920 (bankr. d. n.d. filed july 23, 2010, thomas grabanski had asserted his fifth amendment privilege and refused choice financial group * allowed mr. flournoy to testify at the hearing because he did not qualify as an million in equity beyond the first mortgages that could be used to pay creditors. they additional debt for the grabanskis' personal benefit. they further pointed out that marketing its property for sale, the parties allege that thomas grabanski, as kglp's the loan thomas grabanski allegedly took on behalf of g&k farms without keeley's july 22, 2010. the second case ­ the one particularly involved here ­ was an agent, testified is a reasonable offer on the land.24 section 1104(a) of the bankruptcy code provides: 1104(a)(1). states trustee, and after notice and a hearing, the court shall order the of the creditors in the grabanskis' individual case had accused thomas grabanski of and the benefit of his other farming operations. the keeleys also assert that they had been led to believe that the g&k farms' crop proceeds and insurance determination that such evidence is sufficient to show cause for appointment will * they own or control, have been farming kglp's land without paying rent, and that the that being said, we conclude that the bankruptcy court did not clearly err in debtor * of assets or liabilities of the debtor.11 creditors, asserted several grounds for appointment. the record shows that many turned out, very little of those proceeds went to pay down the choice line. in february 2008, to pay for fertilizer for its farming operations. grabanskis are now leasing the land for less than market value,23 1990); see also in re colorado-ute elec. ass'n, inc., 120 b.r. 164, 176 (bankr. d. 15 317-18 (3rd cir. 2004); in re sundale, ltd., 400 b.r. 890, 899-900 and 900 n. 8 11 u.s.c. § 1104(a). 12 at least and its progeny.17 the grabanskis' request to extend the exclusive solicitation period because they had any conflicts of interest on the part of the debtor-in-possession are for, inter alia, fraud. crop production services has also sued the keeleys for nearly keeleys asserted that circumstances surrounding an offer to purchase kglp's land id. already has listed its properties for sale. consequently, we reject this argument as a v. chinery, 330 f.3d 548, 577 (3rd cir. 2003); ag service centers, l.c., 239 b.r. the keeleys also assert that, in august 2008, thomas grabanski obtained $7 manage kglp's affairs. indeed, the only creditor who spoke against the appointment and farmer. we therefore reject kglp's argument that the bankruptcy court erred crop currently growing on the unruh parcel and provided the partnership the right to a bankruptcy court has of the debtor; (2) the debtor's past and present performance and prospects for the u.s. 375, 389-390, 103 s.ct. 683, 691, 74 l.ed.2d 548 (1983); addington v. performance casts serious doubt on its prospects of reorganization if left under the and § 1123(b)(4) states that a plan may "provide for the sale of all or substantially all to deprive the keeleys of their partnership interests. estate under § 1104(a)(2). jr. was leasing the unruh parcel under a verbal lease, but admitted that the rent securities of the debtor or the amount of assets or liabilities of the the parties moving for the appointment of a trustee bear the burden of proof.14 the grabanskis' and the related entities' crops and equipment. the grabanskis or similar cause, but not including the number of holders of the motion to appoint a trustee in the kglp case. as state above, the court denied first case was a voluntary chapter 11 case filed by thomas and mari grabanski on in re: keeley and grabanski land * in conjunction with the allegation at the hearing held on march 30, 2011, the bankruptcy court considered both as the court in veblen west dairy said, while a chapter 11 debtor's desire to remain contained none of the elements of a plan required under 11 u.s.c. § 1123, nor was it the sale. the offers even allowed kglp to retain possession of the 2011 winter wheat _______________ and related proceedings.5 period be made within such period. 11 u.s.c. § 1121(d)(1). these creditors included the hanson-tallackson parties, phi financial reorganizationiscertainlyanimportantinterest,thatinterestcannotreasonablybesaid motions and harvest crops, the deadline was ultimately extended to september 1, grabanski and texas family farms. choice has begun liquidating equipment assets payments would be used to pay the choice financial operating line of credit. as it meanwhile, at least five creditors, including phi, crop production services, morse, 339 b.r. 823, 829 (d. mass. 2006) ("[f]actual findings for appointment of crop in 2009, g&k farms discontinued operations, and the keeleys say they have not basis for reversal. 25 (bankr. s.d. fla. 2009), and cases cite therein. dissuade u.s. farming from pursuing its offer further, as well as to enjoy farming the allegedly disobeyed those orders, so the state court scheduled a contempt hearing for with separate creditors instead of proposing solutions to all creditors through the plan in response to the formal requests for extension, the bankruptcy court id. at 286, 111 s.ct. 654 (citing herman & maclean v. huddleston, 459 thomas and mari grabanski are farmers living in north dakota who own and time to respond to that motion, again due to needing to respond to other motions and the keeleys and grabanskis executed an agreement to assign partnership interests of a trustee, the lenths, did so because they preferred dismissal and foreclosure. providing false financial statements in connection with their loans. the keeleys have regarding their misconduct, had not yet been proven when the bankruptcy court thomas grabanski, on behalf of g&k farms, expressly agreed with choice that producing a feasible plan of reorganization by agreeing to sell property. they also (1973)). 17 background of both cases here. for the eighth circuit flournoy that he intended to lease it back from kglp for two years. flournoy said subject to bona fide dispute as to liability or amount. the keeleys opposed the sharon steel was decided, the supreme court decided grogan v. garner,18 hired in may 2009 to sell kglp's farms, had received an offer in march 2011, from appointment outweigh the costs in this case. consequently, the court did not clearly (a) at any time after the commencement of the case but before converted to chapter 7 on july 26, 2011. * bankruptcy court for the (2) if such appointment is in the interests of creditors, any equity debtor; or appointment of a trustee ­ becausethepreponderance-of-the-evidencestandardresultsinaroughly interests effective april 30, 2009. in the transfer agreement, the grabanskis agreed reasonable offer to purchase the land, which kglp itself put on the market, supports mismanagement on the part of thomas grabanski. the appointment of a trustee to pay all of both partnerships' debts, liabilities, and expenses. the keeleys assert that to solicit acceptance of plan," claiming to have made significant progress toward debtor - appellant * district of north dakota community and creditors have lost all confidence in thomas grabanski's ability to surrender the collateral to agcountry. submitted: july 22, 2011 meanwhile, after the grabanskis and their entities defaulted on their loans from on november 22, 2010, the grabanskis moved to extend the exclusivity period agcountry's stay relief motion. on january 25, 2001, rather than filing a plan and the january 7 deadline passed without a plan or disclosure statement being 8 grabanskis' request was not in good faith because they had made no attempt to texas, 441 u.s. 418, 423, 99 s.ct. 1804, 1808, 60 l.ed.2d 323 (1979); united out of the partnership and concealed liabilities in order to have the partnership incur of pre-petition voidable preferences or fraudulent conveyances, whether or amended schedules, and could not vouch for the accuracy of the documents. to the number of holders of securities of the debtor or the amount that, at that price, the buyer would not be able to rely on lease payments alone to make july 22, 2010, at 11:00 a.m. the grabanskis filed a voluntary chapter 11 bankruptcy allows kglp to be operated without the distractions and other motivations plaguing grabanski grain, llc, of which the grabanskis are sole members, was also indebted thekeeleysassertthatalthoughthefarmsshouldhavebeenprofitable,thomas * examinations. the court denied the request for a protective order as to thomas and agcountry, have filed adversary actions against the grabanskis for, inter alia, _______________ the individual case 5 as the parties here point out, however, courts disagree on to the extent of that burden. based in part on thomas grabanski's conduct in his individual case, we discuss the of the appeal.8 14 financial later obtained second mortgages on the lenth and unruh parcels as security 27 in unpaid obligations from g&k farms. management,eitherbeforeorafterthecommencementofthecase, foreclosure proceedings as to the lenth parcel. schedules.thomasgrabanskitestifiedthathe could not recall preparing the schedules specifically, they alleged that mr. kalin flournoy, who thomas grabanski had v. * and should be reviewed under a clearly erroneous standard, while the the court stated, "i think it is time now to move forward with this case and either be 4 that the grabanskis have farmed the land without paying rent, the refusal of a also farmers living in north dakota. on february 1, 2007, the keeleys and parties are asserting that the grabanskis have engaged in fraud in connection with the conclusion that the grabanskis are sabotaging attempts to sell, and are, it would despite guaranteed income from crop insurance, and that the grabanskis had not pre-bankruptcy factual background paid by g&k farms to make the payments on the notes secured by the land. in order sufficient for the appointment of a trustee based on allegations of the debtor's fraud by order entered march 30, 2011, the bankruptcy court denied the motion to 6 concluded that the grabanskis' history of unreasonable delay warranted the to conduct its farming operation in 2008, g&k farms obtained financing fromchoice bankruptcy court did not err in finding that the grabanskis will not be able to before schermer, federman, and nail, bankruptcy judges 2010). depression and stress, and prohibiting agcountry from filing any "punitive motions." those matters. given the fact that they have been consistently unable to timely comply table, they would not disclose details and that this made their position suspect. million and $4.5 million, respectively. the offers included a provision that kglp, petitioning creditors - appellees * 16 significant unexplained operating losses of g&k farms, which was supposed to as part of the 2010 extension of the choice financial line of credit, with clear and convincing evidence,15 ordered the appointment of the trustee. however, the allegations are sufficiently filed: september 6, 2011 1 (1) for cause, including fraud, dishonesty, incompetence, or gross appointing a trustee. further, even if the grabanskis were to prevail in the adversaries trustee in the kglp case. they alleged the grabanskis fraudulently transferred assets refused to respond even though he had previously expressly agreed to sell the lenth debtor-in-possession's evenhandedness or lack thereof in dealings with finally, kglp also asserts that it is inappropriate to appoint a trustee for the thomas grabanski were suffering from mental health problems as a result of these thereafter, kglp purchased several tracts of farmland, including two large tracts in in re veblen west dairy llp, 434 b.r. 550, 553 (bankr. d. s.d. 2010) 20 convert and hide agcountry's collateral in violation of the state court orders to unreasonable increase in price was that grabanski had purchased adjacent land. the appointment of a trustee in a chapter 11 case is an extraordinary remedy.12 grabanski. according to the trustee, when the rule 2004 exams were held, ms. appointment. kglp appeals. in re veblen west dairy, 434 b.r. at 555. see also tradex corp. v. december 21, 2011, the bankruptcy court granted the grabanskis' motion and the appointment of a trustee is mandatory.22 against kglp on december 6, 2010. the ground that it was untimely filed. alleged that the schedules are still not accurate. were filed within fifteen days, the case would be dismissed. the grabanskis appealed production services, inc. for the 2009 growing season. however, after planting its kglp, which in turn failed to pay the lenth and unruh note payments, or payments e.g., in re adelphia communications corp., 336 b.r. 610 (bankr. s.d. on the unruh parcel, and has asserted that the keeleys are liable for nearly $2 million 20 no. 11-6020 expert and kglp had not been given advance notice of his testimony. however, * 24 14 interfering with its ability to fulfill its fiduciary duties, and whether there on august 2, 2010, agcountry moved to appoint a trustee in the individual authorization. in that lawsuit, the keeleys filed cross claims against the grabanskis parcel. behalf of kglp in response to the notice of intent to foreclose or notice of sale financial, which required g&k farms to provide a blanket lien on its property, 10 yet, despite the fact that kglp cannot service its debts, and has in fact been farmland was within his range of knowledge and experience as a property broker "there is a strong presumption in favor of allowing a chapter 11 debtor-in-possession kglp is significantly delinquent on its obligations to the sellers of both the offer,eventhough,thekeeleysassert,acceptingitwouldgenerateapproximately$2.6 871 f.2d 1217, 1225 (3d cir. 1989). keeleys to recover debts which had allegedly not been paid by the partnership. one agcountry also alleged that, in a discovery deposition taken in january 2009); in re ag service centers, l.c., 239 b.r. 545, 550 (bankr. w.d. mo. kglp sold its properties, except the lenth and unruh parcels, in order to partially pay context of provisions designed to exempt certain claims from discharge, the bankruptcy court has discretionary authority to determine whether cause thebankruptcycourtmayalsoappointanoperatingtrusteeunder§1104(a)(2) to testify regarding the location and disposition of agcountry's collateral. we review the bankruptcy court's factual findings for clear error and its ordering the appointment of a trustee, even if the higher clear and convincing standard foreclosure on the lenth parcel. the unruhs were also seeking to foreclose. the that order. the bankruptcy court stayed the order in that case pending the outcome mr. flournoy was kglp's own marketing agent, and he testified about his 10 17 the list of duties under § 1106. however, § 1106(a)(5) permits a trustee to file a plan, discussion that debt, with the rest of the proceeds allegedly used for the benefit of thomas requests from the keeleys, thomas grabanski refused to respond to u.s. farming's federman, bankruptcy judge in about may 2009, the keeleys assert, thomas grabanski told them that he incompetence, and gross mismanagement on the part of thomas grabanski.4 to agcountry, and filed its own chapter 11 on july 23, 2010.3 insiders and affiliated entities in relation to other creditors, the existence property for a second growing season without any associated land costs. despite ("kglp"). thomas grabanski and john keeley were the managing partners. * a trustee must be made to a preponderance of the evidence by the appointing judge, g&kfarmshadhadsignificantoperatinglossesunderthomasgrabanski'sdirection, scheduled for december 7, 2010. so, in order to stay that foreclosure sale, the grabanskis were partners. this appeal involves the appointment of a trustee in the down g&k farms' operating line at choice financial. this equity, which could be available to pay creditors, would be lost. also, grabanski statements in their individual case, alleging they needed more time to respond to in possession of the property of the bankruptcy estate and in control of its creditors because of their joint liability with the grabanskis on various partnership or a lessee designated by kglp, could option to lease the land from the buyer after u.s. farming realty trust, l.p., to purchase the lenth and unruh parcels for $3.5 would pay all of g&k farms' debt if the keeleys would assign their partnership created a new entity, texas family farms, llc, to rent and farm the lenth and unruh conclude that he is unable to devote sufficient attention to kglp. further, the money for the unsecured creditors and that they intended to file a plan and disclosure his testimony. he also testified regarding his own personal knowledge of the statement "on or before january 7, 2011." agcountry objected, stating the be evaluated for an abuse of discretion."); in re altman, 230 b.r. 6, 16-17 (bankr. the grabanskis' request for extension of the exclusivity period in their own case, and that "plan" stated only why the court should leave the automatic stay in place -- it no plan and the exclusivity period for filing a plan had lapsed on january 7. for g&k farms' debt. g&k farms also obtained credit from united agri products to pay off some of the debt owed to choice, the grabanskis only applied $100,000 to 13 see, e.g., in re bayou group, llc, 564 f.3d at 546-47; official comm. of for the same reasons cited above, we also conclude that interests of creditors been told where the proceeds of the crop sales or insurance proceeds from that season see in re ionosphere clubs, inc., 113 b.r. 164,168 (bankr. s.d. n.y. of the property of the estate." and, again, thomas grabanski, on behalf of kglp, 7, and for soliciting acceptances until march 6, 2011. a trustee, balanced against the costs of appointment.26 equal allocation of the risk of error between litigants, we presume that filed. at a hearing on january 12, the bankruptcy court ordered the grabanskis to file the lenth parcel would be sold if an offer of $3.5 million was made on it, with any conclusions of law de novo.10 in february 2009, g&k farms borrowed an additional $1.2 million from crop periods, but refused to permit further continuances without evidence from health care parcel for $4.5 million, grabanski asked him to raise the price to $6.5 million and told as stated, the grabanskis filed a voluntary chapter 11 petition on july 22, grabanskis formed a partnership, the keeley and grabanski land partnership extended the exclusivity period for filing a plan and disclosure statement until january supreme court said: marketing of the property. his testimony about reasonable prices in the market for parcel if an offer for $3.5 million was received, which is the exact amount of the offer on october 20. at that time, the grabanskis disclosed an additional eleven personal dealings with thomas grabanski, so there should have been no surprise regarding 16 operations and illness, and with the added pressures of the adversary proceedings, the given away, or lost. equity proceeds being used to pay down the choice loans. on an irrigation pivot lease for 2010. the keeleys also assert that much of g&k's keeleys no longer have a partnership interest in kglp. foreclosure on the lenth parcel. thomas grabanski allegedly took no action on 9 11 precedent to producing a confirmable, feasible plan." whether to appoint a chapter 11 trustee under § 1104(a)(2) are: (1) the trustworthiness successful in the chapter 11 reorganization or simply dismiss the case." the court flournoy testified at the hearing that, after listing the unruh right to a discharge in bankruptcy. we also do not believe that, in the in considering his testimony. bankruptcy court1 other entities he was involved in. he allegedly signed the phi agreement on behalf 2010. on that day, the grabanskis filed some of the schedules, but did not file if that appointment "is in the interests of creditors, and equity security holders, and reasons that follow, the bankruptcy court's order is affirmed. standard of proof.19 vehicles, $831,818.56 in secured debt, and $17 million in unsecured debt. parties have note and, if not made current by august 31, 2010, the lenths would commence accompanied by a disclosure statement as required under 11 u.s.c. § 1125. thomas grabanskis' last motion requested a protective significantly, after trustworthiness of kglp's principals has been seriously questioned; kglp's past agriculture natural resources conservationservices ("nrcs") which indicated that 21 agreeing, inter alia, that thomas grabanski and the grabanskis' bookkeeper, jennifer proceedings pending against the grabanskis and their other entities, and his own easement on 1,972 acres of the lenth parcel as part of a wetlands reserve program. n.y. 2006). petition in their own names at 10:59 a.m that day,2 to the keeleys, the schedules contained significant inaccuracies, and were amended asserted that if kglp allowed the lenths and unruhs to foreclose upon the properties, several requests to postpone the rule 2004 exams, each time alleging that either which with their duties in their individual case due to having to attend to ongoing business order is, therefore, affirmed. of proof applied. that the grabanskis have not accounted for this reported loss. as a result of the losses, confirmation of a plan, on request of a party in interest or the united parties allegedly began planting corn on the lenth parcel, apparently in an attempt to mismanagement of the affairs of the debtor by current at 550). id. (citations omitted). partnership's involuntary case. however, since the decision to appoint the trustee was and the estate warrant the appointment of a trustee under § 1104(a)(2). the kglp asserts that the sole basis for the keeleys' request for appointment of a 23 tibert testified that she helped prepare the original schedules, but not the amended threatening to repossess the irrigation pivots, which add significant value to the lenth withholding documents and information and had asked the keeleys to preferentially irrigation finance solutions, llc, for irrigation pivots constructed on the lenth on july 7, 2010, kglp received a letter from the u.s. department of motivation to keep this case moving is well-founded. as shown above, thomas 4 is unable to service its debt. 12 the loan payments on the farm. flournoy testified that one possible reason for this against the keeley and grabanski land partnership, in which the keeleys and we note that kglp asserts that the bankruptcy court should not have (the "transfer agreement"), wherein the keeleys agreed to assign their partnership kglp and their other entities. and, the parties allege that the grabanskis, or entities opposed the appointment of a trustee and, following a hearing, the court entered an debtor's reorganization; (3) confidence, or lack thereof, of the business community we recognize that many of the allegations against the grabanskis, particularly and u.s. trustee's concern that neither kglp, nor thomas grabanski, has any longer partners in kglp, and that any claim they may have against the debtor was thomas grabanski. as the bankruptcy court did, we recognize that the appointment 2010. after the grabanskis requested three extensions for filing schedules and services, inc., and horse creek farms. _______________ while the majority of courts have concluded that the movant must meet its burden standard of review in re thomas m. grabanski and mari k grabanski, no. 10-30902 (bankr. 1104(a)(2) of the bankruptcy code, even when no cause exists under § 1104(a)(1).27 that case was texas referred to by the parties as the "lenth parcel" and the "unruh parcel," both of in light of all of the allegations and evidence in this case, the bankruptcy court disclosure statement, (3) had not filed amended schedules, (4) were striking side deals serious and widespread to warrant consideration by the bankruptcy court in states v. kras, 409 u.s. 434, 445-446, 93 s.ct. 631, 637-638, 34 l.ed.2d 626 exclusivity period by obtaining an extension of time for gaining acceptances, in evidence), vacated on other grounds, 254 b.r. 509 (d. conn. 2000). grabanski misrepresented the true financial picture of the two partnerships in order case, pointing to fraud in connection with its collateral, as well as dishonesty, he refused to raise the price because it would virtually make the farm unsellable in has been self-dealing or squandering of estate assets. if cause is found, standard of proof for appointment of a chapter 11 trustee is preponderance of the process, and (5) had shown no proof of the alleged progress in developing a feasible d. n.d. filed july 22, 2010). accounting reports. the keeleys also objected on the ground that the grabanskis were equipmenthasbeenre-titledtoothergrabanskientities,tradedinforotherequipment, 7 the bankruptcy court then found cause to appoint a trustee in the kglp case. necessitated the appointment of a trustee. in october 2010, the grabanskis' attorney informed the keeleys of the pending and, factual background 2 in re wiley, 288 b.r. 818, 821 (b.a.p. 8th cir. 2003). to the contrary, however, the keeleys, as well as the u.s. trustee and other


All Content © 2007-2012 The Judicial View, L.L.C. All Right Reserved.
About The Judicial View ®  | Privacy Policy   |  Terms of Use   |  Contact Us  |  Advertise