The Perishable Agricultural Commodities Act (“PACA”) provides federal statutory protection to vendors of fresh fruits and vegetables as the commodities pass through the “foodservice chain” from growers, to distributors and to retailers. PACA packs a real punch, and protects unpaid suppliers of produce by treating them as beneficiaries of a trust. Unpaid PACA vendors who “follow the rules” to maintain their status as trust beneficiaries, are given a first-priority, preemptive, floating trust interest in the commodities themselves, as well as the proceeds and receivables in the hands of those who have sold or disposed of them (“PACA Trust Benefits”).
Articles tagged with: Bashas
Bashas’ and its Secured Lenders Find Something they Agree on: We Need An Accountant!
During the three weeks following the date of its bankruptcy, Bashas’ has locked horns with its secured lender group (a consortium including Compass Bank, Wells Fargo and BankAmerica) on numerous matters – all substantive and all important for Bashas’ prospects. They finally have found an issue on which they agree – they all want to pay big dollars for restructuring advice.
Bashas’ Makes Good on Announced Plans to Shutter Fifteen Stores; What Does this Mean to Suppliers?
Prior to filing its bankruptcy reorganization proceedings on July 12, 2009, Bashas’ announced its intention to close unprofitable stores. Bashas’ now has followed through and requested bankruptcy court authorization to reject fifteen store leases. Bashas’ election to reject these unexpired leases, coupled with the extent to which it rejects additional store leases, serves as a forward indicator on the direction of its reorganization and the extent of recovery by the unsecured trade creditors.
PACA, PASA Issues Complicate Bashas First-Day Motions
The Perishable Agricultural Commodities Act (“PACA”) and its sister statute “Packers and Stockyards Act (“PASA”) provide federal statutory lien protection to vendors of fresh foods and bulk meat. In the Bashas’ bankruptcy, pre-petition supplier claims covered by these two acts are substantial. Bashas’ estimates the combined claims will exceed $6.8 million — $4.2 million in pre-petition claims potentially subject to PACA and $2.6 million in pre-petition claims potentially subject to PASA . Bashas’ asked for blanket bankruptcy court approval to allow (but not require) the debtor to pay PASA and PACA claims. The pre-petition secured lenders have said “Not so fast”. Our first question: “Why are the pre-petition secured lenders concerned about this to begin with?”
Bashas Inc. Bankruptcy – 30 Largest Unsecured Creditors
Bashas’ Inc. and 2 affiliated entities (”Debtors”) filed petitions in Bankruptcy Court for the District of Arizona for relief under chapter 11 of title 11 of the United States Code. Bashas’ is the lead debtor (case no. 09-16050) and filing concurrently were affiliates Bashas’ Leaseco, Inc. (case no. 09-16051) and Sportsman’s L.L.C. (case no. 09-16052). Bashas is a family owned supermarket chain with 158 locations, primarily in Arizona. It is one of the nations largest privately held grocers. Published reports state that Bashas’ has more than 20,000 creditors. The top 30 unsecured creditors as identified by Bashas’ Inc. are listed below: