PACA Trust Provision Webinar – Session Recording and Presentation Now Availablee

On January 29, 2013, the USDA published the session recording and presentation materials from its recent PACA Trust Provision Webinar.  If you missed the webinar or would like to view it again, below is a link to a recording of the event.

PACA Trust Webinar Session Recording

As you will see, the USDA hosts the session recording and you will need to follow the directions provided to listen to the recorded session.

For those of you who do not wish to listen to the recorded event, you may find the presentation materials with speaker notes here:  PACA Trust Webinar – January 2013

Given the significant amount of questions asked during the webinar, the speakers were unable to answer them.  So, the USDA and I invite you to ask your questions directly to any of the speakers.

Karla Whalen – Director, PACA Division

Tel: (202) 720-4180  E-mail: karla.whalen@ams.usda.gov

Josephine Jenkins – Acting Chief, Investigative Enforcement Branch, PACA Division

Tel: (202) 720-0616  E-mail: josephine.jenkins@ams.usda.gov

Jason Klinowski, Esq. – PACA Trust Attorney, Freeborn & Peters LLP

Tel: (312) 360-6536  E-mail: jklinowski@freebornpeters.com

Eurofresh Seeks an Expedited Section 363 Sale

On January 28, 2013, Eurofresh, Inc. appeared before the U.S. Bankruptcy Court in Arizona and pushed for an expedited section 363 sale.  Importantly, a section 363 sale under the Bankruptcy Code occurs when the debtor seeks to sell substantially all of its assets.  This type of asset sale is often the path a debtor elects when they want “opt out” of the process for obtaining a Chapter 11 plan of reorganization in favor of what is often perceived as a quicker and more efficient process.  A section 363 sale may also be a sign that the debtor’s estate cannot afford the administrative expense of a prolonged reorganization.

In the Eurofresh bankruptcy case, the debtor intends to sell substantially all of its assets “free and clear of any liens or other interests” under section 363(f).  Section 363 will also allow Eurofresh to assign any favorable unexpired leases and executory contracts to the buyer.  This adds value to the purchase and effectuate, at least in part, the purpose of a Chapter 11 proceeding without the debtor actually complying with all of the Chapter 11 reorganization requirements.  This is not always a successful move…  Ample case-law exists where courts have refused to approve a 363 sale because the transaction appeared to be a back-door reorganization effort that significantly restructured the rights of the creditors.  When a court denies a 363 sale the debtor is forced to continue to satisfy all of the Chapter 11 requirements.

Right now, it appears that Nature Sweet is going to be the stalking horse bidder, which means they will set the price for the purchase of Eurofresh’s assets.  This does not guarantee that the stalking horse bidder will win or that the terms of the sale are not objectionable to the creditors.  These are all issues that will need to be addressed.

One such issue will be the payment of all PACA trust claims.  At this time the Court is entertaining a motion to set up a procedure for handling PACA claims, but a proposed PACA claims procedure order has not been filed.  A proper order will be critical to both the success of the section 363 sale and the debtor’s proper use of its cash collateral.  As usual, a PACA claims bar date will be set and notice will be issued.

 

Eurofresh, Inc. Files for Chapter 11 Bankruptcy Protection

On January 27, 2013, Eurofresh, Inc. filed for Chapter 11 Bankruptcy Protection in the District of Arizona.  Eurofresh is America’s largest greenhouse grower and markets its products directly to major U.S. food retailers under the label “Eurofresh Farms” and “Sweet Star.”

Pleadings filed along with Eurofresh’s bankruptcy pleadings indicate that the Debtor owes in excess of approximately $49 Million to its First Lienholders, approximately $36 Million to Second Lienholders and approximately $11 Million to Unsecured Creditors.

Eurofresh’s bankruptcy pleadings also disclosed an estimated $600,000.00 in PACA Trust liability.  At this time, a motion is pending to install a procedure for addressing PACA claims.  There is also a motion pending for Eurofresh to utilize is cash…  As with any produce industry bankruptcy, it is important for PACA trust beneficiaries to assert their claims quickly before the Court authorizes the Debtor’s use of funds that may be needed to ensure the PACA Trust beneficiaries receive full payment.

PACA Trust Litigation Alert

PACA Trust Litigation Alert

On January 4, 2013, a civil action was filed in Michigan against Produce Buyers Company, Inc. in an effort to collect approximately $145,730.00 in alleged PACA trust debt.  The Court in this case recently issued a temporary restraining order.

On January 10, 2013, a civil action was filed in Missouri against Field Fresh Processed Foods, Inc. in an effort to collect approximately $6,870.00 in alleged PACA trust debt.

On January 14, 2013, a civil action was filed in New Jersey against Anthony Gangemi, Inc. in an effort to collect approximately $158,220.00 in alleged PACA trust debt.

On January 15, 2013, a civil action was filed in Indiana against Bakker Produce, Inc. in an effort to collect approximately $58,980.00 in alleged PACA trust debt.

On January 15, 2013, a civil action was filed in New York against Beyer Farms, Inc. in an effort to collect approximately $61,950.00 in alleged PACA trust debt.

On January 23, 2013, a civil action was filed in Maryland against Pinkberry Midatlantic, LLC in an effort to collect approximately $54,600.00 in alleged PACA trust debt.

On January 23, 2013, a civil action was filed in New York against both National Frost, Inc. and Newland North America Foods, Inc. in an effort to collect approximately $377,290.00 in alleged PACA trust debt.

On January 25, 2013, a civil action was filed in Florida against Isadore A. Rapasadi and Sons, Inc. in an effort to collect approximately $32,500.00 in alleged PACA trust debt.

On January 25, 2013, a civil action was filed in Massachusetts against Annex Market Gardens, Inc. in an effort to collect approximately $28,500.00 in alleged PACA trust debt.

Please check your A/R to see if these cases affect you.  If the do, please do not wait to assert your rights.

Jason Klinowski Served as PACA Expert at Recent USDA Webinar

On January 24, 2013, Jason Klinowski joined Karla Whalen (Director – PACA Division) and Josephine Jenkins (Acting Chief – Investigative & Enforcement Branch – PACA Division) in Washington, DC to serve as special guest speaker and subject matter expert on a Webinar event that focused on the PACA Trust.  During this Webinar, Jason spoke to the produce industry from a private practitioner’s point of view and discussed how the PACA Trust operates in both civil and bankruptcy court proceedings.

A link to this Webinar event will be added here shortly.