Claim in Allens case too late, judge says

A U.S. bankruptcy judge ruled in favor of Allens Inc. on Monday, saying claims made by sweet-potato grower D&T Farms under the Perishable Agricultural Commodities Act came too late.

The Perishable Agriculture Commodities Act, or PACA, regulates the sale of fresh and frozen produce to avoid unfair-trade practices and ensures sellers are paid in a timely manner. Valid claims are paid dollar-for-dollar in bankruptcies, and valid claims under the act are moved to the head of the line for payment, even ahead of secured debtors.

North Carolina-based D&T Farms had done business with Siloam Springs-based Allens Inc. for more than 15 years and said it was owed $86,505.96.

Bankruptcy Judge Ben Barry wrote in an opinion that D&T Farms failed to file the required notice of intent to make a claim under the act within the proper deadlines. Barry did not rule on D&T Farms’ request, as an alternative to a Commodities Act claim, to allow the company to make a claim under Bankruptcy Code 503(b)(9), which places some vendors in a better position to collect debts.

“Obviously, we are disappointed the Court found for the debtors on the question of D&T Farms’ PACA Trust protections,” D&T Farms’ attorney Heather Kennealy wrote in an email Monday. “We will continue to rigorously pursue fair compensation for goods purchased by debtor from D&T Farms amounting to $86,505.96, and appreciate that the Court left the question of filing a 11 USC § 503(b)(9) claim open for further consideration.”

In late October, Allens Inc. filed for Chapter 11 protection in U.S. Bankruptcy Court for the Western District of Arkansas. Sager Creek Acquisition Corp. bought the company in February with a winning bid of $123.8 million. The total value of the deal is about $160 million.

According to court documents filed Friday, $19.18 million in Commodities Act claims had been made since Allens Inc. filed for bankruptcy, and a little more than $12 million of them are disputed by Allens Inc.

Business, Pages 26 on 04/15/2014

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