Another SIST subsidiary files for bankruptcy: Foreclosure of raceway on hold with latest reach for Chapter 11

The Shwano Leader/December 24, 2010

The foreclosure of a racetrack property owned by a subsidiary of the Samanta Roy Institute of Science and Technology (SIST) was stalled Thursday by a new bankruptcy filing in federal court.

However, Shawano County Circuit Court Judge James Habeck granted a summary judgment against SIST, allowing the creditor in the case to go after SIST's assets to recover the debt.

Just before a motion hearing was set to get underway Thursday, Habeck said he had received notice that U.S. Acquisitions and Oil, Inc. (USAO) filed for Chapter 11 bankruptcy in Delaware on Wednesday.

Southwest Guaranty, Ltd. filed suit against SIST and USAO in December 2008 alleging the USA International Raceway, which is operated by USAO, and SIST defaulted on a $2.2 million loan.

Southwest attorney, Steven J. Krueger - who was appointed receiver of the racetrack property earlier this year - said his office received notice of the bankruptcy by fax on Wednesday night.

"The defendants continue to - I guess, in the spirit of candor - continue to make a mockery of the legal system by continuing to file bankruptcy after bankruptcy," Krueger said.

Nevertheless, he said, the new filing means the foreclosure could not go forward at this time because of an automatic stay on civil action.

"Unfortunately, right now it is a valid bankruptcy which the stay does apply to," Krueger said.

However, he said, the new filing does not prevent the circuit court from issuing a summary judgment against SIST, which is not protected by the stay. SIST was a guarantor of the loan, according to the civil suit.

There was no legal counsel for SIST or USAO present for the hearing.

Krueger took possession of the racetrack property at W5901 County Road BE in Wescott in June after being appointed receiver.

SIST subsequently petitioned to the federal court to have the case moved there and the case was removed from Shawano County Circuit Court to the U.S. District Court for the Eastern District of Wisconsin.

In October, however, a federal judge remanded back the case back to Shawano County Circuit Court.

In making his ruling, U.S. District Judge Rudolph Randa said SIST had not presented proper grounds for the case to be removed from the state court system.

Randa also chastised and sanctioned SIST for filing court documents containing "fantastic and delusional" allegations against judges, city officials and Shawano Mayor Lorna Marquardt.

Habeck said Thursday there was a valid argument for the foreclosure since it was clear there was a default on the loan. He also said the defendants had not adequately responded to a series of requests for discovery in the case.

"I found a pattern of responses that were truly not representative and did not deal with the topic," he said.

Habeck said there was valid authorization for a summary judgment against SIST in making his ruling. Meanwhile, the foreclosure action remained up in the air.

"I guess we'll have to see what happens with U.S. Acquisitions," he said.

Krueger is also legal representative for Fox Communities Credit Union, which was in the process of a foreclosure action on two apartment buildings in the City of Shawano owned by another SIST subsidiary, Midwest Properties of Shawano, LLC.

The properties at 463 Humphrey Circle and 1024 East Fifth Street were scheduled for a sheriff's sale on July 14, but the sale had to be adjourned indefinitely after Midwest Properties filed a bankruptcy petition the day before.

Earlier this week, a federal judge in Delaware dismissed the bankruptcy cases of Midwest Properties and Midwest Oil of Minnesota, LLC.

Midwest Oil's bankruptcy petition had staved off a pending sheriff's sale of one of its properties in Minnesota.

Midwest Properties and Midwest Oil were originally part of a bankruptcy petition filed in Delaware by SIST and six of its subsidiaries in March 2009.

A federal judge dismissed the bankruptcy petition and an appeal of that decision was later upheld. SIST is currently appealing those rulings to the Third Circuit Court of Appeals.

To see more documents/articles regarding this group/organization/subject click here.