Posted February 3, 2014
While various produce suppliers claim Allens Inc. owes them over $19 million under the Perishable Agricultural Commodities Act (PACA), Allens is disputing $18.3 million of that amount and arguing that the suppliers did not follow proper procedures, according to an article by The Packer available here.
Allens Inc., a canned food company based in Siloam Springs, Arkansas, filed for bankruptcy in October with total debts between $100 million and $500 million and between 1,000 and 5,000 creditors.
Fifty-two creditors have filed PACA claims and Allens object to all but two of those claims. A hearing is set for Feb. 11 on those objections.
Jason Klinowski, attorney for Allens, argues that the companies failed to preserve their protection under PACA by: setting payment terms beyond the 30-day maximum set by PACA; charging interest in excess of the legal limit; charging for goods that don’t qualify for PACA protection; and failing to deduct ancillary expenses such as transportation and fuel costs from PACA claims.
The Perishable Agricultural Commodities Act (PACA), 7 U.S.C. §§ 499a-499t, was enacted in 1930 to regulate the marketing of perishable agricultural commodities in interstate and foreign commerce. The primary purposes of the PACA are to prevent unfair and fraudulent conduct in the marketing and selling of perishable agricultural commodities and to facilitate the orderly flow of these commodities in interstate and foreign commerce. The PACA is administrated and regulated by the Agricultural Marketing Service (AMS).
The PACA trust provisions give sellers of fresh and frozen fruits and vegetables priority status as a creditor if their buyers become insolvent or file for bankruptcy protection. Sellers must, however, preserve their trust rights by following certain criteria under the PACA.
For more information on the Perishable Agricultural Commodities Act (PACA), please visit the National Agricultural Law Center’s website here.
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