PORTLAND (AP) – Shaw’s heiress Mary Alice Davis filed for bankruptcy protection just days before one of the estates she owns in Falmouth is slated to go up for sale in a foreclosure auction. But the attorney for the mortgage company seeking to foreclose on the property contends that Davis made the bankruptcy filing in “bad faith,” simply to prevent Friday’s sale from taking place.

Michael Gartland, the Portland attorney representing the lenders, said Davis owes creditors nearly $2 million after she defaulted on three loans this summer.

Gartland said more than 20 people announced intentions to bid on the property, which is worth more than $1 million.

After a hearing Wednesday, a U.S. Bankruptcy Court judge ruled that the auction can go on as scheduled but that the sale cannot be completed prior to a ruling on Gartland’s motion for relief from the stay, the attorney said. A final hearing on the motion is set for Oct. 13.

Davis inherited her property from her late husband, Howard Davis, and his father, H. Halsey Davis, co-founder of the Shaw’s Supermarkets chain.

Her attorney, Thomas Grossman of Brookline, Mass. said Davis is legally trying to reorganize her debt under bankruptcy laws. Grossman said Gartland and Davis’ creditors are rushing to sell her property to reap a profit.

“They’re acting in an increasingly zealous manner to make sure they get this property,” Grossman said.

The bankruptcy filing is the latest controversy surrounding Davis, a former cosmetologist known for feuding with the town of Falmouth over land-use restrictions that have limited her plans for developing her property.

This summer she gathered enough signatures to force a town referendum this November on a new ordinance to compensate property owners for value lost because of such town regulations.

Davis owns a $2.3 million mansion next door to the 16-acre estate slated for auction Friday. It was the homestead of her late father-in-law.

AP-ES-09-15-04 1446EDT

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