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General Produce, Inc. v. Roper

August 18, 2008

GENERAL PRODUCE, INC., PLAINTIFF,
v.
TIMOTHY E. ROPER, DEFENDANT.
C LANE COMPANY, LLC, PLAINTIFF,
v.
TIMOTHY E. ROPER, DEFENDANT.



The opinion of the court was delivered by: H. Bruce Guyton United States Magistrate Judge

(Phillips/Guyton)

ORDER ON JOINT MOTION FOR ESTABLISHMENT OF A PACA CLAIMS PROCEDURE

WHEREFORE, the Plaintiffs, C Lane Company, LLC ("C Lane") and General Produce, Inc. ("General Produce"), have asserted various claims against the defendants, TCRS, Inc. d/b/a East Tennessee Produce (the "Company") and Timothy E. Roper (the "Principal") (the Company and the Principal are further collectively referred to as the "Defendants"), under Perishable Agricultural Commodities Act, 1930, 7 U.S.C. §§ 499a-499t (2004 & Supp. 2007) (the "PACA").

WHEREAS, Floyd Wilcox & Sons, Inc., Poppell's Produce, Inc., Castellini Company, LLC, Monterey Mushroom, Inc., Russet Potato Exchange, Inc., and Okray Family Farms, Inc. are known, qualified PACA Trust Creditors who have a definite interest in this case and who will be intervening into this case to assert their legal rights following entry of this Order so as to ensure judicial economy (collectively including C Lane and General Produce are referred to herein as the "PACA Creditors")

WHEREAS, Redbow, Inc., ("Redbow") as assignee of Branch Banking and Trust Company ("BB&T") promissory notes, security agreements and financing statements has asserted or is in the process of asserting a secured, non-PACA interest against assets held in the Company's name or in its legal possession.

WHEREAS, the Company and Principal are located in the Eastern District of Tennessee and with substantially all of the assets held in the Company's name or in its legal possession being located in this District.

WHEREAS, the trust provisions of PACA establish a statutory, nonsegregated trust under which Defendants are required to hold all Trust Assets including all inventory, proceeds and accounts receivable in trust for qualified beneficiaries until full payment is made. 7 U.S.C. § 499(e)(c)2.

WHEREAS, the Company has ceased all business operations and filed a voluntary petition under Chapter 7 of the United States Bankruptcy Code, 11 U.S.C. §§ 101-1330, case number 3:07-bk-32864.

WHEREAS, G. Wayne Walls is the duly appointed Chapter 7 Bankruptcy Trustee for the Debtor Company (the "Trustee") and by agreement is made a party to this proceeding due to a potential interest in the distribution of assets and bound by the Court's rulings but is not required to participate.

WHEREAS, the United States Bankruptcy Court for the Eastern District of Tennessee entered an Order lifting the automatic stay against the Company (See 3:07-bk-32864 Doc. #100), thereby properly permitting the PACA Creditors to name the Company as a defendant in this action.

WHEREAS, the PACA Creditors, Redbow and Trustee, having discussed resolving this matter prior to submitting the instant motion and have agreed to litigate and resolve all claims against the Defendants in this District Court and agreed regarding the terms of this PACA Claims Procedure Order outlined below which shall establish the manner in which the Company, with the Principal's assistance, will liquidate its remaining assets, and do so in an orderly fashion to satisfy possible priority claims pursuant to which the PACA Creditors may be entitled to elevated trust beneficiary status under the PACA.

Accordingly, IT IS HEREBY STIPULATED AND AGREED, by and between C Lane, General Produce, Redbow and the Trustee, as follows:

A) Under PACA, the PACA creditors and other similarly situated trust beneficiaries may be entitled to a beneficial interest in a single pool of the Company's assets which may include, without limitation, inventory of perishable agricultural commodities (herein "Produce"), proceeds from the sale of Produce, the Company's accounts receivable, cash, and other assets, produce related or not, commingled with proceeds of Produce (collectively the "PACA Trust Assets"). The PACA creditors reserve the right to assert that the Company's other assets, including without limitation, furniture, fixtures, equipment, vehicles, leases and leasehold improvements (collectively the "FF&E") should be considered and deemed to be included in the definition of PACA Trust Assets.

B) The parties agree that this Order is reasonable and necessary to provide a procedural framework for the orderly marshaling and liquidation of the Company's PACA Trust Assets, FF&E and accounts receivable.

C) The parties agree that this Order is reasonable and necessary to provide a procedural framework to review, qualify and satisfy any and all claims against the single PACA trust, to maximize the recovery for all unpaid beneficiaries of the PACA trust and to ensure that the rights of all potential claimants are efficiently addressed in a single proceeding without the expense of administering multiple separate actions to enforce the Defendants' obligations to all potential PACA trust claimants.

I. ESTABLISHMENT OF PACA TRUST ACCOUNT:

1. Within three (3) business days of the date of entry of this Order, General Produce's counsel is hereby directed to open a non-interest bearing account at any federally insured bank within this District, under the account name of "TCRS PACA Trust Account", under TCRS's federal tax identification number for the benefit of all qualified PACA trust beneficiaries and to hold any and all PACA Trust Assets until further Order of this Court (the "PACA Trust Account"). Michael W. Ewell, counsel for General Produce, shall serve the signatory on the account and Mr. Ewell shall file reports of all account activity with the Court on a quarterly basis or otherwise as the Court may request. The PACA Trust Account shall not be subject to execution, levy, or attachment by any PACA or non-PACA creditor without further order of this Court.

2. Once the PACA Trust Account is opened, the Company and any of its corporate officers shall immediately deliver any and all sums constituting PACA Trust Assets in the Company's possession to Mr. Ewell for deposit into PACA Trust Account to be held on behalf of the qualified trust beneficiaries.

3. Any bank or financial institution holding PACA Trust Assets of the Company is hereby directed, upon receipt of this Order via facsimile transmission or otherwise, to transfer the funds in that account ...


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