Press Release May 2006

Bankruptcy Court Grants Motion For Summary Judgment

Scheef & Stone represents The Hondo Trust dated January 7, 2000 (the "Debtor") along with Brady Baxter, the trustee of the Debtor; his father, Robert Baxter and The Hondo Trust dated June 28, 1999 (the "Midland Trust"). The Baxters, the Midland Trust and the Debtor (hereinafter, the "Baxter Defendants"), along with the third party beneficiary, Lawrence Beason ("Beason"), were embroiled in a state court lawsuit styled James W. Ayres and Carol S. Ayres v. Brady R. Baxter, Robert P. Baxter, Lawrence L. Beason, W. Scott Epley, The June 28, 1999 Hondo Trust and The January 27, 2000 Hondo Trust, in the 298th District Court of Dallas County, Texas, Cause No. 03-017464 ( the “State Court Action”). The State Court Action was filed on February 28, 2003 and arose out of a lawsuit filed by James and Carol Ayres in a federal court lawsuit styled Ayres v. Baxter, in the United States District Court for the Northern District of Texas, Dallas Division, Civil Action No. 3:99-cv-02641 (the “Federal Court Action”). Ayres' State Court Action is an attempt to collect the judgment obtained in the Federal Court Action as well as seeking to set aside the creation of the Midland Trust and the Debtor, alleging that said trusts were created with the intent to hinder, delay and defraud the Ayres.

On April 24, 2004, the Ayres and the Baxter Defendants entered into a Rule 11 agreement in the State Court Action whereby the Baxter Defendants agreed not to
encumber the assets of the respective trusts or sell any of the assets of the trusts without the written consent of the Ayres. From the date of said Rule 11 agreement until the filing of this proceeding, the Ayres and the Baxter Defendants were working in concert to reduce the indebtedness of the properties owned by the trusts in Ruidoso, New Mexico.

On September 15, 2005, Beason filed a crossclaim against the Baxter Defendants in the State Court Action demanding an accounting, the dissolution of the trusts and the removal of Brady Baxter as trustee for both trusts. The Baxter Defendants countersued Beason for legal malpractice arising out of his representation of the Baxters in the Federal Court Lawsuit giving rise to the litigation that all parties are currently embroiled.

Patrick Schurr Wins Motion For Summary Judgment on Reorganization of the Hondo Trust

The Debtor filed its chapter 11 proceeding on December 1, 2005 styled In re The Hondo Trust dated January 7, 2000, in the United States Bankruptcy Court for the Northern District of Texas, Dallas Division, case no. 05-86931-BJH-11, as a result of Beason's application for the immediate appointment of a receiver in the State Court Action and the posting of the Property by North Houston Bank for foreclosure on December 6, 2005. The hearing on the receiver application was slated for December 2, 2005.

The filing of the bankruptcy was met immediately with a motion to dismiss the bankruptcy and a motion for relief from stay filed by North Houston Bank contesting the eligibility of a business trust to be a debtor under the Bankruptcy Code.

A contested hearing was conducted on the motions of North Houston Bank on January 25, 2006. At the hearing, the Court decided that the Debtor was eligible for relief under the Bankruptcy Code as a business trust and denied the motions of North Houston Bank.

The Debtor filed its disclosure statement and plan of reorganization on March 1, 2006 and after approving the disclosure statement, the Court set the hearing on the confirmation of the Debtor's plan of reorganization on May 17, 2006. The Debtor overcame the objections of the County of Dallas and North Houston Bank to the confirmation of the debtor's plan of reorganization and was able to present a consensual plan of reorganization to the court for approval on May 17, 2006. The Debtor's plan contemplates the sale of over 37 acres of real property located at Kiest Boulevard and Southerland Avenue in South Dallas and such sale will result in the Debtor paying all claims asserted against the Debtor, with said claims being in excess of $1,600,000.00.

After confirmation, the Scheef & Stone will continue its representation of the Baxter Defendants in the State Court Action where they will resolve the issues between the Baxters and Beason After confirmation, the Scheef & Stone will continue its representation of the Baxter Defendants in the State Court Action where they will resolve the issues between the Baxters and Beason.