In that case, as in this one, the PACA creditors' claims exceeded the amount of assets in the estate; for that reason, the Super Spud court held that the PACA trustee was obligated to collect and distribute those assets without reimbursement for his own expenses. Id; see also Dairy Fresh Foods, Inc. v. Ramette ( In re Country Club Market, Inc.), 175 B.R. 1005, 1010 (D. Minn. 1994) ("The burden is upon the wholesale produce dealer to ensure that trust assets are maintained."). This court finds that Midwest Markets had a duty to maintain the trust assets and to set aside the $25,000 for the benefit of its unpaid supplier, Produce One. The creditor has a priority claim, in the amount of $25,000, held explicitly for Produce One in partial payment of its PACA claim.
) (quoting 29 U.S.C. § 1103(a)) (emphasis added); In re Long John Silver's Rests., Inc., 230 B.R. 29, 32 (Bankr. D.Del. 1999) (PACA provides that certain buyers of perishable agricultural commodities hold the "commodities . . . in trust for the benefit of all unpaid suppliers or sellers of such commodities.") (quoting 7 U.S.C. § 499e(c)(2)) (emphasis added); Dairy Fresh Foods, Inc. v. Ramette (In re Country Club Mkt., Inc.), 175 B.R. 1005, 1008 (Bankr.D.Minn. 1994) (quoting Minn. Stat. § 27.138 as providing that a wholesale produce dealer "holds trust assets in trust for seller.") (emphasis added); see also 7 U.S.C. § 196 ("All livestock purchased by a packer in cash sales . . . shall be held by such packer in trust for the benefit of all unpaid cash sellers of such livestock until full payment has been received by such unpaid sellers") (emphasis added); 7 U.S.C. § 197 ("All poultry obtained by a live poultry dealer . . . shall be held by such live poultry dealer in trust for the benefit of all unpaid cash sellers or poultry growers of such poultry, until full payment has been received by such unpaid cash sellers or poultry growers, unless. . . .") (emphasis added).
Ringel Valuation Servs., Inc. v. Shamrock Foods Co. (In re Arizona Fast Foods, LLC), 299 B.R. 589, 596 (Bankr.D.Ariz. 2003); Dairy Fresh Foods, Inc. v. Ramette (In re Country Club Market, Inc.), 175 B.R. 1005, 1010 (D.Minn.1994); 5 Collier on Bankr.¶ 547.03[2]. See also 11 U.S.C. § 541(b); Drabkin v. Dist. of Columbia, 824 F.2d 1102 (D.C.Cir.
7 U.S.C. § 499e(c)(2); J. C. Produce, Inc. v. Paragon Steakhouse Restaurants, Inc., 70 F.Supp.2d 1119, 1120 (E.D. Cal. 1999); In re Country Harvest Buffet Restaurant, Inc., 245 B.R. 650, 654 (B.A.P. 9th Cir. 2000); Kurtzman v. CIT Business Credit Corp. (In re N. Merberg Sons, Inc.), 166 B.R. 567, 570 (Bankr. S.D.N.Y. 1994); In re W. L. Bradley Co., Inc., 75 B.R. 505, 513 (Bankr. E.D. Pa. 1987). Since PACA trust funds are not property of the estate, sellers of the product covered by PACA have a defense to a subsequent preference action by a trustee. Ringel Valuation Servs., Inc. v. Shamrock Foods Co. (In re Arizona Fast Foods, LLC), 299 B.R. 589, 596 (Bankr. D.Ariz. 2003); Dairy Fresh Foods, Inc. v. Ramette (In re Country Club Market, Inc.), 175 B.R. 1005, 1010 (Bankr. D.Minn. 1994); 5 Collier on Bankr. ¶ 547.03[2]. See also 11 U.S.C. § 541(b);Drabkin v. Dist. of Columbia, 824 F.2d 1102 (D.C. Cir. 1987); In re Fresh Approach, Inc., 51 B.R. 412 (Bankr. N.D. Tex. 1985).
In re Fresh Approach, 51 B.R. 412, 419 (Bankr.N.D.Tex.1985); Cf.In re Country Club Market, Inc. 175 B.R. 1005, 1010 (D.Minn.1994). As to the PACA claim in this case, the Debtor purchased certain produce from Shamrock pre-petition which would be classified within the purview of the Perishable Agricultural Commodities Act, as amended.
In re Fresh Approach, 51 B.R. 412, 419 (Bankr.N.D.Tex. 1985); Cf. In re Country Club Market, Inc. 175 B.R. 1005, 1010(D.Minn. 1994). As to the PACA claim in this case, the Debtor purchased certain produce from Shamrock pre-petition which would be classified within the purview of the Perishable Agricultural Commodities Act, as amended. As the Debtor received payments for the produce, it was required to hold the funds in trust for Shamrock. These funds never became property of the bankruptcy estate, and the Debtor, or the Liquidating Trustee, as the Debtor's successor, was required to turn these funds over to Shamrock.
3. PACA assets are not property of a bankruptcy estate. Dairy Fresh Foods, Inc. v. Ramette (In re Country Club Market, Inc.), 175 B.R. 1005, 1009 (D.Minn. 1994); In re Morabito Bros., Inc., 188 B.R. 114, 116 (Bankr.W.D.N.Y. 1995). 4. The burden of proof is on the PACA debtor to show that a disputed asset is from a non-trust source.
See Dairy Fresh Foods, Inc. v. Ramette (In re Country Club Market, Inc.), 175 B.R. 1005, 1008-1009 (D.Minn. 1994) (statutory trust is not a statutory lien). Accordingly, the $718,128.83 already paid to Bedford was a payment of unsecured claims.