If a customer has filed bankruptcy, the seller should notify the bankruptcy court it is a priority creditor under PACA trust provisions (7 U.S.C.499e(c)). Priority creditor status should be indicated on the “Proof of Claim” submitted to the clerk of the bankruptcy court. Under bankruptcy law, trust creditors have priority and should be paid first from trust assets.
About PACA Licensing & the Trust
In general, any person who buys or sells more than 2,000 pounds of fresh or frozen fruits and vegetables in any given day is required to be licensed under PACA. Additionally, any entity selling at retail is subject to a PACA license once the invoice costs of fresh and frozen fruit and vegetable purchases exceed $230,000 in a calendar year.
Although growers who only sell fruits and vegetables they grow themselves are not required to be licensed under PACA, they may choose to get a license for the convenience it provides in preserving trust rights. Only sellers with a PACA license can use the official trust language on their invoices to preserve their trust rights on every transaction.
For futher information about the PACA Trust, contact Investigative Enforcement Branch chief Travis Hubbs at PACAInvestigations@ams.usda.gov or call (202) 720-6873.
