PACA is a federal law that helps ensure produce dealers get paid for what they sell. Provisions under the PACA trust put sellers of fresh and frozen fruits and vegetables in a priority status in the event buyers become insolvent or file for bankruptcy protection.
PACA trust
When a supplier sells produce to a buyer, the supplier becomes eligible to participate in the PACA trust. This requires buyers maintain a trust on fruits and vegetables received but not yet paid for. It is not a separate account but funds should be designated for the produce payments. In the case of a business failure or bankruptcy, the debtor’s trust assets are not available to other creditors until all valid trust claims have been satisfied.
Because of this, USDA said suppliers that file for trust protection have a far greater chance of recovering money owed them when a buyer goes out of business.
That was certainly the case for Medley, Florida-based Freedom Fresh, which claimed Crystal Cruises owed it $492,097.92, including $299,204.63 for produce items.
Paid within days
The supplier filed Jan. 31 in US District Court in Miami, stating it had preserved its interest in the PACA trust for $299,204.63 by issuing invoices to Crystal for each transaction containing the statutory language required by PACA. Freedom Fresh also claimed interest for the overdue invoices, collection costs and legal fees.
Crystal Cruises ceased operations Feb. 11.
In a Feb. 18 filing, Freedom Fresh confirmed it had received a $322,652.94 PACA payment.
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