BCLP Global Restructuring & Insolvency Developments

Global Restructuring & Insolvency Developments

the voracious PACA trust

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Florida Proves Safe Haven for Individuals Liable for Breach of the PACA Trust (bonus: form complaint attached)

Editors’ Note:  For those of you who like to get something you can use from blog posts, attached here is a Form PACA Nondischargeability Complaint for a PACA seller against a party that controlled a PACA buyer, where such controlling party later files for bankruptcy.  Although, in light of the case discussed below, there is an open legal question of whether violations of the PACA trust by an individual in control of a PACA buyer result in a non-dischargeable debt under Section 523(a)(4) of the Bankruptcy Code.  To see some of our other coverage of PACA issues, a personal favorite of Leah’s and Mark’s, see here and here.

In Coosemans Miami v. Arthur (In re Arthur), the Bankruptcy Court for the Southern District of Florida held last week that individuals in control of a PACA trust may still receive a bankruptcy discharge of debts arising from their breach

In Case You Missed It – PACA Trust Rights in Bankruptcy are Just Plain Old Secured Claims

Happy 2018!  We at The Bankruptcy Cave have been itching to write about the Cherry Growers Chapter 11 case – which really is ground-breaking – but the holidays, life, and yes, work for clients too, all just got in the way.  But with each passing week, the case stayed on our minds.  So now that time permits, here is the writeup – and see below for the remarkable significance of the case.

In re Cherry Growers (now reported at 576 B.R. 569, Bankr. W.D. Mich. 2017), is a garden-variety produce-related bankruptcy case.  (Ha ha, “garden-variety” produce, get it?)  The Debtor bought produce and sold it to others, in addition to conducting other food distribution activities.  When the Debtor filed for bankruptcy, there was the typical push-and-pull between a lender secured by the Debtor’s inventory and a/r, and a supplier claiming a trust interest in those same assets, protected by the

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