In Michael Farms v. Lundgren (In re Lundgren), the U.S. Bankruptcy Court for the Western District of Wisconsin issued a ruling that explains the potential personal liability of a person in control of a company that purchases perishable agricultural commodities when the seller of such commodities is not paid by the bankrupt company. No. 11962-13, Adv. Pro. No. 13-138, 2013 Bankr. LEXIS 5301 (Bankr. W.D. Wis. Dec. 17, 2013).
In that case, Bankruptcy Judge Furay declined to dismiss a complaint to determine the dischargeability of debts under Section 523(a)(4) of the Bankruptcy Code, based on the alleged dissipation of assets held under a trust established by the Perishable Agricultural Commodities Act, 1930, § 5(c)(4), as amended, 7 U.S.C.A. § 499e(c)(4) (PACA). In doing so, Judge Furay confirmed that a person in control of a company may be held personally liable for the amounts owed to a seller of perishable agricultural commodities without the need for the seller to pierce the corporate veil of the buyer or have a personal guarantee from the control person.
PACA
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