Download Legal Relationship - Washington Association of Wine Grape Growers

Winery/Grower
Relationships:
Grower Liens and
Payment Strategies
Washington Association of Wine Grape Growers
February 6, 2009
Tools for Revenue Protection
Business Relationship
 Trust
 Financial Capacity
 Cash Flow
Legal Relationship
 Common Law
 Written Agreement
 State Statutory Liens
 PACA
Assessing the Business
Relationship
 History
 References
 Diligence
 Payment Assurances
 Business Realities
 Communication
Common Reasons for Slow Pay/No
Pay to Growers…
 Revenue Problems
 Credit Problems
 Dispute about Performance
 Misunderstanding about Payment Terms
Grape Purchase/Sale Agreements
 Payment Terms
-- pricing, timing, and adjustments
 Penalties/Interest
 Attorney’s Fees
 Cross Defaults
 Liens and Security Interests
 Delivery Receipts and Invoices
Liens and Security Interests
 How and when does it “attach”?
 What debt is “secured”?
 What is the “collateral”?
 How is it “perfected”?
 Enforcement timeframes
Uniform Commercial Code
Security Interests
 Mutual Agreement about:
-- Debt secured
-- Collateral identified (juice, wine, A/R?)
 Perfected by filing UCC Financing Statement
 Effective for 5 years
Statutory Grower Liens (WA)
Processor’s Lien (RCW 60.13.020)
 Inventory and A/R
 File within 20 days after default (use UCC-1)
http://www.dol.wa.gov/business/UCC/uccforms.html
 Priority over other secured creditors
 Expires after 12 months
Statutory Grower Liens (OR)
Agricultural Produce Lien (ORS 87.700)
 Inventory and proceeds
 File APL-1 within 45 days after final due date
http://filinginoregon.com/forms/pdf/ucc/430.pdf
 Priority if secured creditors notified within 20
days.
 Expires after within 225 days
Statutory Grower Liens (CA)
Producer’s Lien (Food & Ag Code 55631)
• Inventory and A/R
 No filing required for priority
 Expires in 2 years if no written contract
Perishable Agricultural
Commodities Act (PACA)
 Produce Buyer and Seller Licensing
(optional for grower-only sellers)
 Fair Trading Regulations
 Prompt Payment Default -- 10 days; longer
must in writing
 Statutory Trust for Payment
PACA’s Statutory Trust
 Agreed payment terms not >30 days
 Preserve rights by notice within 30 days or
invoice language (if licensed seller)
 Trust beneficiaries have priority in trust
assets: grapes, wine, and A/R.
PACA Invoice Language
“The perishable agricultural commodities listed on
this invoice are sold subject to the statutory trust
authorized by Section 5c of the Perishable
Agricultural Commodities Act, 1930 (7 U.S.C.
499e(c)). The seller of these commodities retains
a trust claim over these commodities, all
inventories of food or other products derived
from these commodities, and any receivables or
proceeds from the sale of these commodities until
full payment is received.”
Using Liens and PACA Trust
Strategically
1. Contract
2. Calls
3. Letter
4. Lawyer Letter
5. Perfect Lien/Trust Rights
6. Enforcement
Take Home Points…
1. Build good relationships.
2. Establish good contract rights.
3. Maintain PACA license and invoice
language.
4. Act promptly; file liens timely.
5. Use statutory rights to lever payment.
6. Be prepared to fight banks if there isn’t
enough to go around.
Grower Liens and
Payment Strategies
Questions?
Jess Lyon
(503)778-5268
[email protected]