In Re Sepco, Inc., Debtor. United States of America, Farmers Home Administration, and Valley State Bank v. Arlon Industries, Inc.

FAGG, Circuit Judge.

Valley State Bank and the Farmers Home Administration (FmHA) appeal the district court’s affirmance of a bankruptcy court ruling in a lien priority dispute arising out of the failure of Sepco, Inc.’s alcohol fuel production facility in South Dakota. The Bank and FmHA seek priority for security interests first acquired by the Bank and now shared by FmHA in return for financing construction of Sepco’s facility. The bankruptcy court found that Arlon Industries, Inc., has a valid mechanic’s lien on Sepco’s plant and equipment with priority over the Bank’s security interests in…