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.
