Lawyers who collect and distribute money for produce suppliers under the federal Perishable Agricultural Commodities Act, or PACA, cannot be paid from the so-called PACA trust funds unless the claimants consent, according to a March 11 Fifth Circuit opinion.
A couple who were no longer farming and did not intend to farm in the future nonetheless qualified as “family farmers” eligible for reorganization under chapter 12.
A husband and wife last engaged in farming about two years before they filed a chapter 12 petition. Even then, they rented land in another state where their son did the farming. They testified at the Section 341 meeting that they did not intend to farm in the future.
In deciding whether someone is a “family farmer” eligible for chapter 12, partnership income is included, but scheduled debt is not, for creditors who did not file claims, according to Bankruptcy Judge Joan A. Lloyd of Louisville, Ky.
The case dealt with some of the family farmer eligibility requirements contained in Section 101(18)(A). An individual must generate more than 50% of “gross income” from farming and currently cannot have more than $4,153,150 in debt.