The Perishable Agricultural Commodities Act (PACA) was enacted at the request of the fruit and vegetable industry to promote fair trade in the industry. A qualifying seller of produce may quickly freeze bank accounts of those who have purchased produce until a Court can confirm PACA qualification and that the amount is owed and/or the debtor pays the account in full. Collection often occurs within a matter of weeks instead of a few years like so many other efforts to collect.

In the event that the produce buyer has filed for bankruptcy, a PACA creditor may have the right to be paid first, before other creditors. Items subject to a collection pursuant to PACA include any produce inventory, products derived from that produce, as well as cash or accounts receivable generated from the resale of produce.

The produce buyer is required to maintain sufficient assets to make full payment to its PACA creditors as bills become due. Thus, PACA also allows collection from the personal assets of an owner or corporate principals (officers and directors) where the produce buyer’s assets are insufficient to satisfy its PACA obligations.

The attorneys at Pratt & Associates are well-versed in PACA law, and have had particular success in collecting accounts owed to their PACA clients. Important steps must be followed so that a produce seller can avail itself of all the benefits and protections of the PACA act. It is important to consult with counsel on this issue even before accounts receivables are late, to assure that proper business practices are in place to maximize the produce seller’s recovery.