The Vermont division of U.S. Bankruptcy Court has dismissed Daniel Banyai’s attempt to block the town of Pawlet’s claim to his property, after he accumulated more than $300,000 of debt to the town.
The May 22 ruling marks the latest action in a yearslong legal battle over Slate Ridge, a 30-acre property Banyai used as a paramilitary training gun range, which violated local zoning rules.
Banyai filed for bankruptcy in December, temporarily pausing the town’s legal actions against him. Shortly after, Banyai filed a motion to avoid the town’s liens under the homestead exemption of Vermont’s property statutes.
The attorney representing the Town of Pawlet, Merrill Bent, said the court ruling brings the town “one step closer” to foreclosure on the Slate Ridge property, and that subsequent proceedings will determine whether the debt can be discharged. Bent said the town’s position is that the debt cannot be waived because it includes “fines owed to a governmental unit,” or the town of Pawlet.
As of Dec. 3, Banyai owed the town approximately $325,000 in total noncompliance fees and that debt continues to accumulate at a flat rate of 12% interest amounting to an additional $98 every day since, according to Bent.
The U.S. Bankruptcy Judge Heather Cooper acknowledged that Banyai met debt relief requirements under the homestead exemption under federal bankruptcy code. However, Cooper ruled that Pawlet still has a claim to the property due the narrow scope of the exemption and the timeline of ownership of the homestead.
Banyai formed and served as director of a 501(c)(3) organization called Slate Ridge Inc. during the litigation and transferred ownership of the Pawlet property to the nonprofit organization through quitclaim deed in December 2022. He then moved the property back to his individual ownership in November 2024.
The fees Banyai owes to Pawlet — including the contempt lien from January and June of 2024 and the town’s attorney fees granted by the Superior Court in May 2024 — were all issued before Banyai personally reacquired the Slate Ridge property this past November.
According to the court’s memorandum, Banyai “held neither legal nor equitable title” to the homestead when the town claims were issued, as it was owned under a separate legal entity — Slate Ridge Inc. As a result, the court ruled that the property remains subject to the town’s liens and that the debt claims cannot be avoided under the homestead exemption.
Bent said the court examined the question of whether Banyai had a “clear right to acquire the property from the company at the time the town’s liens attached.” She said, “there was no evidence that he had any such right.”
The town first took legal action against Banyai in 2019 after he began making changes to the property and erecting structures without permits — actions that alarmed neighbors living in West Pawlet. After the Environmental Division of Vermont Superior Court imposed fines against Banyai in January 2022, Banyai did not alter his property to comply with zoning bylaws and continued to make changes to his property.
The lack of compliance ultimately led a judge to hold Banyai in contempt of court in February 2023, issuing sanctions and a warning of arrest. That same judge issued a warrant for Banyai’s arrest in 2023, which was reissued in 2024 after continued noncompliance.
Bent said the town is continuing to pursue “all the steps necessary to enforce its bylaws and to recoup the expense of having to do so.”
“Ultimately, Mr. Banyai is the one who’s going to pay the cost of the enforcement,” Bent said.
Banyai’s lawyer, Michael Fisher, was not immediately available for comment Tuesday.
