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L&M Companies, Inc. v. Unique Food Co., Inc.

United States District Court, E.D. North Carolina, Western Division

December 11, 2019

L&M COMPANIES, INC., et al., Plaintiffs,
v.
UNIQUE FOOD COMPANY, INC., etal., Defendants.

          ORDER

          James C. Dever III United States District Judge.

         On June 13, 2019, John C. Bircher III, Administrative Counsel ("Administrative Counsel"), moved for Interim Distribution of Available Funds [D.E. 148] ("Interim Distribution Motion"). On June 27, 2019, plaintiffs L&M Companies, Inc. ("L & M") and Palumbo Foods, LLC ("Palumbo") responded in opposition [D.E. ISO] and intervenor Select Funding, LLC ("Select Funding") responded in opposition [D.E. 151]. On July 11, 2019, intervenors JH Honeycutt & Sons, Inc., Lipman-Texas, LLC, Nature's Way Farms, Inc., Nickey Gregory Company, LLC, and The Thomas Colace Company, Inc. replied in support of the interim distribution [D.E. 152, 153], As explained below, the court grants Administrative Counsel's Interim Distribution Motion.

         I.

         Administrative Counsel submitted the Interim Distribution Motion pursuant to the consent order. See [D.E. 63, 122]. Pursuant to the consent order, Administrative Counsel took steps to secure and preserve assets and to marshal funds of defendant Unique Foods Company, Inc. ("Unique"). Administrative Counsel did so for the benefit of parties claiming entitlement to trust funds arising under the Perishable Agricultural Commodities Act ("PACA") and who submitted proof of those claims according to the procedures provided in the consent order (i.e., the "PACA Claimants").

         Since his appointment, Administrative Counsel has marshaled funds from the sale of real estate that Unique owned and from collecting accounts receivable. See Mot. [D.E. 148] ¶ 3. Administrative Counsel is accumulating additional funds by selling certain equipment that Unique owned, and continuing to collect Unique's accounts receivable. See Id. As of June 11, 2019, Administrative Counsel had marshaled $987, 905.67. See Id. ¶ 4.

         Administrative Counsel has determined that $225, 000.00 (the "Available Funds") is available for an immediate distribution to PACA Claimants according to the procedures outlined in the consent order. See Id. ¶ 5. Administrative Counsel has determined that the remainder of the funds, in the amount of approximately $760, 565.29, should be withheld and preserved pending resolution of certain disputes including those (i) regarding disposition of funds from the sale of Unique's real property, which represent the amount of $719, 889.34, and (ii) regarding objections to amounts claimed by the PACA Claimants. See Id. Additionally, as payment for attorneys' fees, Administrative Counsel has received one payment of $6, 314.45 and is due a second payment of $2, 249.38. See Id. ¶ 6. Administrative Counsel has reflected these amounts as deductions, in the amount of withheld funds. See id.

         Administrative Counsel prepared a chart summarizing the following information with respect to the PACA Claimants (the "PACA Trust Chart"):

a. Asserted PACA Claimants, with principal amounts claimed, accrued interest claimed, fees claimed, total amount claimed, pro rata percentage (per PACA Claimant) of the total dollar amount of all PACA claims, and amount of each claim subject to objection;
b. Invalid claim amount;
c. Settled amount;
d. Valid claim amount for first (i.e., "interim") distribution;
e. Pro rata share of first distribution of Available Funds;
f . Amount of share withheld;
g. Distribution for undisputed ...

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