Phillip D. ARMSTRONG, Trustee of the Bankruptcy Estate of Kye Trout, Jr., Appellant, v. NORWEST BANK, MINNEAPOLIS, N.A., Appellee

LARSON, Senior District Judge.

I

Phillip D. Armstrong is Trustee for the bankruptcy estate of Kye Trout, Jr. Trout was engaged in the business of developing oil and gas properties. When Trout filed a Chapter 11 bankruptcy petition in January of 1987, Norwest Bank was his primary secured creditor, holding properly perfected mortgages and security agreements, and assignments of production, in twenty-six of Trout’s properties. Trout was indebted to Norwest for a sum in excess of five million dollars.

After his Chapter 11 filing, Trout was prohibited from using proceeds from the sale of the oil and…