The Washington-Oregon Canning Pear Association suggests growers consider making legal claims against Del Monte Foods for pears delivered this year, as the canner enters bankruptcy proceedings.
In a letter to growers last week, the association that collectively negotiates canned pear prices urged growers who delivered to Del Monte to consider claiming Perishable Agricultural Commodities Act, or PACA, trust rights and state agricultural lien rights against the company in bankruptcy court.
Del Monte, once the pear industry’s largest canner, announced this spring it would not negotiate prices for canning pears, and in early July it filed for Chapter 11 in the District of New Jersey Bankruptcy Court.
The Walnut Creek, California, company then announced a further reduction to delivery volumes on remaining contracts days before harvest, the letter said.
The Washington-Oregon Canning Pear Association, or WOCPA, has hired the law firm K&L Gates, which has an office in Newark, New Jersey.
Attorneys expect the bankruptcy judge to approve Del Monte’s motion to reject the outstanding contracts for pears it has not received, the letter said.
However, Del Monte did receive a limited quantity of pears after filing for bankruptcy, and WOCPA is concerned that those growers may not receive payment for their fruit as the case proceeds. To boost the case, growers may assert either a PACA trust claim or a state agricultural lien on pears delivered to Del Monte, the letter said.
Passed in 1930, PACA protects growers during the bankruptcy proceeding of a buyer by requiring that proceeds from the sale of perishable commodities are put into a trust for unpaid suppliers. That trust then has priority in a bankruptcy proceeding, ahead of other creditors, according to the American Bankruptcy Institute. Likewise, filing an agricultural lien can offer priority over other liens.
Both options likely have tight deadlines.
“Time is of the essence,” the letter said.
WOCPA has sample forms and templates available for the claims but urges producers to contact their own attorneys for more information. •
