What are the effects of a buyers filing bankruptcy on PACA trust claims?
Filing of bankruptcy can have no effect on a PACA trust claim. Because the produce buyer/debtor is simply holding your money until your invoice becomes due, these funds never become property of the debtor’s estate and the Bankruptcy Court has no jurisdiction over the PACA trust assets. Courts have unanimously held that PACA trust assets are not part of a debtor’s bankruptcy estate. PACA claims are outside of the normal claims and priority process in bankruptcy.
