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: PACA-PASA
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?”