Ninety minutes before James Leachman of Billings would have lost ownership of two ranches east of the city, he delayed the federal foreclosure sale by filing for personal bankruptcy.

The noted cattleman and horse breeder filed Wednesday at noon for Chapter 12 bankruptcy, a type used for farm and ranch operators.

About 30 people gathered in front of the Yellowstone County courthouse to attend the auction set for 1:30 p.m. The group included several attorneys, financial advisers, real estate agents, a title company representative or two, several curious onlookers and at least two serious bidders.

At the last minute, U.S. Marshal Dwight MacKay stepped in front of the group and read an order canceling the sale.

Great Falls attorney Gary Deschenes, who filed Leachman's bankruptcy papers, was not immediately available for comment. But Leachman's Billings attorney, Tom Towe, said Chapter 12 is designed to help farmers and ranchers who own valuable property but have inadequate cash flow to pay their debts.

"If Jim wants to press this, and I think he does, it makes sense to not hold a sale at a courthouse, but to advertise it well and get the ranch spiffed up and work out water and access problems," Towe said.

The bankruptcy will postpone the auction for an unspecified period of time, further dragging out this long, six-year legal dispute.

Leachman Cattle Co. is delinquent on nearly $2.4 million in debt to the U.S. Farmers Home Administration. The proceeds from the sale of the two ranches presumably would have paid off the federal government and maybe left some money for other creditors.

After spending three decades building a world-class cattle genetics operation that attracted buyers from all over the world, James Leachman and his companies fell deeply into debt.

On Dec. 27, 2006, U.S. District Judge Richard Cebull of Billings ordered Farmers Home Administration to sell the ranches to collect the debt. Cebull ruled that the Hairpin Cavvy ranch two miles east of Billings on Highway 87E would be sold first, followed by the main Home Place ranch, 16 miles east of town. The judge allowed Leachman to keep his Billings home.

Leachman appealed that decision to the 9th U.S. Circuit Court of Appeals in San Francisco, arguing that he personally owned the Hairpin ranch, so it shouldn't be sold to pay the corporation's debts. However, last spring the 9th Circuit upheld Cebull's decision and ordered the ranch auction.

The bankruptcy filing showed few details, only that Leachman and his companies - Leachman Cattle Hairpin Cavvy, Leachman Cattle Baron Bulls, Hairpin Cavvy and Leachman Cattle Barons - owe money to as many as 50 creditors.

The only potential bidder willing to be quoted was James Stinehagen, who last fall purchased the nearby Scott ranch that Leachman had owned. When a property is sold at foreclosure, the previous owner has 12 months to come up with the money and reclaim the property. Leachman has until Nov. 14 to reclaim the Scott ranch.

Stinehagen said he came to Wednesday's sale to buy the Home Place.

"Together these two would make the best ranch in Eastern Montana," he said.

Stinehagen said he was going to pick Billings' most expensive steakhouse to collect the bankruptcy bet he made with his attorney.

"I knew Leachman would do this because this is his last resort, his last card," Stinehagen said.

When a property is facing foreclosure, the owner almost always stops paying property taxes and that is the case with the Leachman ranches.

Leachman Cattle Co. owes nearly $8,300 on 39 parcels to Yellowstone County for tax year 2008. That doesn't include Big Horn County tax records. The Home Place ranch extends into both counties.

In addition, Leachman is engaging in a legal shootout with fellow Billings rancher Jack McGuinness.

On June 22, Leachman filed a civil lawsuit against McGuinness and his Quarter Circle Cattle Co., accusing McGuinness of breeching a grazing agreement. Leachman asked District Court Judge Susan Watters to issue an injunction and temporary restraining order against McGuinness, who owned the Billings Livestock Commission Co. until he sold it in 2003.

In February, McGuinness paid $100,000 for the grazing leases and $15,000 to Leachman personally for the right to graze cattle for six months on his ranches or on pasture leased from the Crow Tribe.

McGuinness' attorney, Mark Parker, of Billings, responded that Leachman leased land he didn't have the authority to lease. Watters has denied Leachman's request for a temporary restraining order.

But in just 23 days, the dueling attorneys have filed 21 motions in the civil dispute, inflating the court file to nearly 2 inches thick.

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