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providing written notice to the nonpaying entity on the invoice.70 Perfection of a PACA trust fund interest is permitted under 11 U.S.C. §§ 362(b)(3) and 546(b).71
Courts have held that PACA trust fund assets are not property of the estate.72 One court has held a PACA creditor could demand immediate payment of the amount of its interest in PACA trust funds, where the creditor perfected its interest 60 days prior to order for relief, reasoning that the corpus of the trust was not property of the estate.73 A successful PACA claimant may also be able to recover interest on the trust funds and/or attorneys' fees.74
V. UTILITIES
Section 366 governs the rights of utilities to discontinue service. Under § 366(a), a utility may not alter, refuse or discontinue service to or discriminate against the debtor solely on the basis of the commencement of a bankruptcy or that a debt owed by the debtor before the order
70
7 U.S.C. 499e(c)(4). Prior to a 1995 amendment, the notice requirements were more cumbersome and strict. See, e.g., In re Marvin Properties, Inc., 854 F.2d 1183 (9th Cir. 1988) (notice requirement strictly construed and Secretary's notice to debtor insufficient to create trust as seller must in all instances conform with statute).
71
St. Joseph Bank & Trust Co. v. DeBruyn Produce Co. (In re Prange Foods Corp.), 63 B.R. 211 (Bankr. W.D. Mich. 1986) (bankruptcy petition filing does not toll PACA filing period or excuse PACA claimant from timely perfecting).
72
In re Kornblum & Co., Inc., 81 F.3d 280 (2nd Cir. 1996); In re Joaquin Food Service, Inc., 958 F.2d 938 (9th Cir 1992) (when PACA interest is established, trust proceeds are separate from PACA trustee's estate); C.H. Robinson Co. v. B.H. Produce Co., 723 F. Supp. 785, aff'd, 952 F.2d 1311, rehearing denied 961 F.2d 224 (PACA trust exempt from bankruptcy estate and is therefore paid before secured creditors); In re Frosty Morn Meats, Inc., 7 B.R. 988, 1005 (N.D. Tenn. 1980) (court relied on treatment of trust funds under similar trust provisions of the Packers and Stockyards Act in holding PACA trust funds not property of estate); In re G&L Packing Co., Inc., 20 B.R. 789 (Bankr. N.D N.Y. 1982), aff'd 41 B.R. 903 (N.D. N.Y. 1984); In re Fresh Approach, Inc., 48 B.R. 926, 931.
73 In re Fresh Approach Inc., 51 B.R. 412 (Bankr. N.D. Tex. 1985)
74In re Milton Poulos, Inc., 947 F.2d 1351 (9th Cir. 1991) (creditor in bankruptcy entitled to fees where it successfully established PACA claim and fees to be paid out of PACA trust funds): In re Southland + Keystone, 132 B.R. 632 (9th Cir. BAP 1991) (creditor may be awarded prejudgment interest on trust amount even though PACA statutes do not expressly provide, but not attorneys' fees); In re Fair, 134 B.R. 672 (Bankr. M.D. Fla. 1991) (attorneys' fees awarded for PACA claim work, but no recovery allowed for costs of suit and interest).
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