UNDERWOOD LAW FIRM, P.C.

Thomas C. Riney, SBN: 16935100

W. Heath Hendricks, SBN: 240556451

500 South Taylor, Suite 1200, LB 233

Amarillo, Texas 79101

Telephone: (806) 376-5613

Facsimile: (806) 379-0316

Email: tom.riney@uwlaw.com

Email: heath.hendricks@uwlaw.com

-andMichael R. Johnson (Pro Hac Vice)

RAY QUINNEY & NEBEKER P.C.

36 South State Street, Suite 1400

Salt Lake City, Utah 84111

Telephone: (801) 532-1500

Facsimile: (801) 532-7543

Email: mjohnson@rqn.com

Attorneys for Rabo AgriFinance LLC

IN THE UNITED STATES BANKRUPTCY COURT 

FOR THE NORTHERN DISTRICT OF TEXAS

AMARILLO DIVISION 

IN RE:

McCLAIN FEED YARD, INC., McCLAIN

FARMS, INC. and 7M CATTLE FEEDERS, 

INC., 

Debtors.

1

CASE NO. 23-20084-7-rlj

(Jointly Administered Cases)

Chapter 7

1 The Debtors in these jointly administered Chapter cases are: (a) McClain Feed Yard, Inc. (Case No. 23-

20084), (b) McClain Farms, Inc. (Case No. 23-20885) and 7M Cattle Feeders, Inc. (Case No. 23-20886). 

All three cases are being jointly administered under the case number for McClain Feed Yard, Inc.

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RABO’S RESPONSE TO THE MOTION OF NORTHLAND FINANCIAL SERVICES, 

LLC, FOR RELIEF FROM THE AUTOMATIC STAY AS TO EQUIPMENT

Rabo AgriFinance LLC (“Rabo”), through counsel, hereby fields this Response to the 

Motion of Northland Financial Services, LLC for Relief from the Automatic Stay as to Equipment

(the “Motion”), filed July 21, 2023 as Dkt. 86.

For its Response to the Motion, Rabo states as follows:

1. Rabo has no objection to the entry of an Order granting the Motion.

2. In the Motion, however, the movant, Northland Financial Services, LLC 

(“Northland”), references the various Equipment Master Lease Agreements that were entered 

into concerning the Equipment that is the subject of the Motion, and otherwise suggests that the 

contractual relationship between Northland and the Debtors was a lessor-lessee relationship.

3. Rabo has reviewed the underlying Master Lease Agreements (the “Agreements”) 

identified in the Motion. 

4. The Agreement for Lease 18869-01 provides for 20 quarterly payments of 

$8,356.08 each, with an option to purchase the Equipment at the end of the term for $101.00.

5. The Agreement for Lease 18869-03 provides for 12 quarterly payments of 

$7,915.83 each, with an option to purchase the Equipment at the end of the term for $101.00.

6. The Agreement for Lease 18869-04 provides for 16 quarterly payments of 

$9,709.38 each, with an option to purchase the Equipment at the end of the term for $101.00.

7. Under the Uniform Commercial Code, a transaction in the form of a lease creates 

a security interest and is really a secured financing transaction rather than a leasing transaction 

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“if the consideration that the lessee is to pay the lessor for the right to possession and use of the 

goods is an obligation for the term of the lease and is not subject to termination by the lessee,” 

and “the lessee has an option to become the owner of the goods for no additional consideration 

or for nomination consideration upon compliance with the lease agreement.” Tex. Bus. & 

Comm. Code § 1.203(b).

8. Here, the Agreements between Northland and the Debtors are secured financing 

transactions and not true leases because (a) the Agreements are not subject to early termination 

by the Debtors, and (b) the Debtors have the option to become the owner of the Equipment 

identified in the Agreements “for nominal consideration upon compliance with the lease 

agreement.”

9. While Rabo does not object to the Motion or to an order granting Northland stay 

relief, Rabo does object to the Motion to the extent Northland seeks findings that the contractual 

relationship between it and the Debtors was a leasing transaction rather than a secured financing 

transaction.

10. As the Court is aware, Rabo asserts that it has a properly perfected first priority 

blanket lien on and security interest in all of the Debtors’ equipment and other personal property, 

which blanket lien would be subordinate only to properly perfected purchase money security 

interests in certain items of equipment.

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11. Even assuming that Northland has a properly perfected purchase money security 

interest in the Equipment that is the subject of the Motion, Rabo would be entitled to any equity 

in the Equipment remaining after Northland’s claims are paid in full.2

12. While the proposed Order submitted with the Motion contains language that 

nothing set forth in the Order “shall constitute a determination or finding concerning the lien 

validity or priority of any other creditor or party in interest with respect to the Equipment,” lien 

validity and priority is only relevant if the Equipment is owned by the Debtors and is not merely 

leased by the Debtors, since Rabo’s lien only attaches to property of the Debtors and not to third 

party property that the Debtors are merely leasing under a true lease.

13. For this reason, Rabo requests that the Court, in ruling on the Motion, make clear

on the record or in its Order that it is not making any findings concerning the nature of the 

Agreements, including that it is making no findings that the Agreements between Northland and 

the Debtors are true leases. 

 DATED this 4th day of August, 2023.

UNDERWOOD LAW FIRM, P.C.

Thomas C. Riney, SBN: 16935100

W. Heath Hendricks, SBN: 240556451

500 South Taylor, Suite 1200, LB 233

Amarillo, Texas 79101

Telephone: (806) 376-5613

Facsimile: (806) 379-0316

Email: tom.riney@uwlaw.com

Email: heath.hendricks@uwlaw.com

2 While Rabo concedes that Northland has a perfected security interest in the Equipment, Rabo does not 

concede that Northland has complied with all of the Article 9 requirements for obtaining and perfecting a 

purchase money security interest in the Equipment. However, as Northland’s proposed Order expressly 

excludes any lien priority findings, that question is not before the Court. 

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--and--

RAY QUINNEY & NEBEKER P.C.

Michael R. Johnson (Pro Hac Vice)

36 South State, Suite 1400

Salt Lake City, UT 84111

Telephone: (801) 532-1500

Facsimile: (801) 532-7543

Email: mjohnson@rqn.com

/s/ Michael R. Johnson

Michael R. Johnson

Attorneys for Rabo AgriFinance LLC

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CERTIFICATE OF SERVICE

I hereby certify that on August 4, 2023, the foregoing document was filed with the Clerk 

of the Court in the above-entitled Chapter 7 case using the CM/ECF system, which sent notice of 

electronic filing to all electronic filing users in the case.

/s/ Michael R. Johnson

Michael R. Johnson

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