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Produce Alliance, L.L.C. v. Sheppard Produce

June 15, 2011



WHEREAS, on May 23, 2011, Produce Alliance, LLC ("Plaintiff") commenced the instant action against Defendants Sheppard Produce, Inc. d/b/a S&G Produce Company ("S&G Produce Company"), and its principals, Stanley R. Sheppard and Marilyn C. Sheppard (collectively, the "Defendants") to enforce the trust provisions of Section 5 (c) of the Perishable Agricultural Commodities Act, 7 U.S.C. §499e(c) ("PACA").

WHEREAS, on May 26, 2011, the Court entered a Temporary Restraining Order ("TRO") prohibiting the dissipation or alienation of any assets of Defendant S&G Produce Company and its related companies pending a hearing on Plaintiff's Motion for Preliminary Injunction.

WHEREAS, the trust provisions of PACA establish a statutory, non-segregated trust under which Defendants are required to hold all qualified trust assets including but not limited to inventory, proceeds, and accounts receivable in trust for qualified beneficiaries until full payment is made. 7 U.S.C. §499e(c)(2).

WHEREAS, on or about June 6, 2011 S&G Produce Company was in the process of winding down its business operations.

WHEREAS, counsel for Plaintiff and Defendants have conferred and reached an agreement regarding the terms of this Consent Injunction (the "Order") to establish the manner in which the remaining assets of S&G Produce Company will be liquidated and the rights, liens, claims and priorities determined as to these assets.

Accordingly, IT IS STIPULATED AND AGREED, by and between Plaintiff and Defendants as follows:

A) S&G Produce Company consents to the entry of an Injunction against it upon the terms reflected in this Order and any additional terms this Court deems necessary to give effect to this joint request for issuance of this Order.

B) S&G Produce Company recognizes that Plaintiff and other similarly situated unpaid suppliers of produce may be entitled to a beneficial interest in the single pool of S&G Produce Company's PACA trust assets as defined by applicable law and regulation as perishable agricultural commodities, inventory of food or products derived from such perishable agricultural commodities, and receivables or proceeds from the sale of such commodities and food or products derived therefrom ("PACA Trust Assets"). Plaintiff reserves the right to assert that other assets of S&G Produce Company and any affiliated entities should be considered or deemed to be included within the definition of PACA Trust Assets, including without limitation, non-produce related inventory, furniture, fixtures, equipment, vehicles, leases, real property, and leasehold improvements (the "FF&E"). Plaintiff reserves all rights and claims in and to the assets of S&G Produce Company and/or any proceeds realized therefrom, and also reserves the right to pursue its deficiency claims, if any, against the principals of S&G Produce Company and potential transferees of PACA Trust Assets. Defendants reserve all rights, liens, claims and defenses regarding the amount, validity, and PACA trust status of the claims of Plaintiff or any other similarly situated PACA trust beneficiaries, as well as all rights, liens, claims and defenses regarding all assets of S&G Produce Company.

C) The parties agree that this Order is reasonable and necessary to provide a procedural framework for the orderly liquidation of S&G Produce Company's PACA Trust Assets and FF&E, and to review, qualify and satisfy any and all claims against the PACA Trust Assets, to maximize the recovery for all unpaid beneficiaries of the PACA trust, and to ensure the rights of all potential claimants are efficiently addressed in a single proceeding without the expense of administering multiple separate actions to enforce S&G Produce Company's obligations to all potential PACA trust beneficiaries.

D) This Order may be executed in any number of counterparts with the same effect as if all signatories had signed the same document. All counterparts must be construed together to constitute one instrument.

Based on the foregoing, IT IS HEREBY ORDERED, as follows:


1. Pursuant to Fed. R. Civ. P. 65, this Order is binding upon the parties to this action, their officers, agents, employees, banks, or attorneys and all other persons or entities who receive actual notice of the entry of this Order. In this regard, Defendants are hereby directed to serve a copy of this Order on all financial institutions with which they do any business, or who may be holding any assets for or on behalf of it. S&G Produce Company, its agents, employees, officers, directors, creditors and representatives are restrained and enjoined from hypothecating, transferring, dissipating, levying or executing on any assets of S&G Produce Company except as set forth in this Order.

a. Exclusion from Injunction: Sheppard Transportation, LLC is hereby released and excluded from the injunction set forth above. Plaintiff reserves the right to later assert that Sheppard Transportation, LLC is in unlawful possession of PACA trust assets and/or that it is otherwise liable to Plaintiff under the trust provisions of the PACA, 7 U.S.C. § 499e(c).


2. Defendants shall provide a detailed listing of all outstanding accounts receivable (the "Receivables"), accounts payable and all other assets held in S&G Produce Company's name to the signatories of this Order within five (5) business days of the date of this Order. Such information shall be as current as possible. D.L. Evans Bank shall provide an accounting of any and all funds belonging to Defendants in the possession of D.L. Evans Bank, including ...

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