If payment must be made to all PACA creditors pro-rata, can a seller simply wait for a distribution?
The PACA trust is not self-enforcing. To obtain a maximum recovery, many avenues must be explored and pursued through the court system. This often involves recovering assets in the hands of third parties. A direct correlation exists between how quickly the creditor acts after the trust is found to be under funded and the percentage of your claim recovered. The PACA statute provides for no enforcement mechanism and trust notices no longer need to be served on the PACA branch. Therefore, it is up to each individual PACA trust creditor to enforce its claim. Unless PACA creditors enforce their claims, no money will be recovered for distribution. While every produce buyer is charged with maintaining the trust, the seller who takes no action relies on a buyer who has already proven it will not honor its obligations to voluntarily pay the trust claim.
Related Questions
- Is a seller entitled to reimbursement of its attorneys, fees from other PACA trust creditors who attempt to "free ride" on the trust enforcement action?
- If payment must be made to all PACA creditors pro-rata, can a seller simply wait for a distribution?
- If I do credit counselling with Mosaic can creditors still call looking for payment?
