Civic Center Square, Inc. v. Ford (In re Roxford Foods, Inc.)

This appeal arises out of an adversary proceeding brought in the bankruptcy case of Roxford Foods, Inc. (Roxford) by appellee Civic Center Square, Inc. (CCS). James M. Ford, as Trustee for Roxford (the Trustee), and Purina Mills, Inc. (Purina) appeal the decision of the district court affirming the bankruptcy court’s Order Denying Motion to Vacate Judgment. We reverse.

I. FACTUAL AND PROCEDURAL BACKGROUND

In March of 1990, Roxford filed for Chapter 11 in bankruptcy. In order to facilitate the sale of certain of its real property and equipment, Roxford filed three motions, including a Joint Motion for Order Authorizing Distribution of Sale Proceeds. On April 6, 1990, Purina filed an objection to this motion, contending that distribution should not proceed without requiring Caisse Nationale de Credit Agricole (“Credit Agrieole”) and Farm Credit Leasing Services Corporation (“Farm Credit”), who held claims secured by the facilities, to draw down approximately $2.5 million under letters of credit. These letters of credit were issued on appellee CCS’s application, and are secured by a deed of trust against a CCS building.

As a result of these objections and subsequent negotiations…