The PACA imposes licensing and employment restrictions on a person who has been found to be responsibly connected with a firm that has had its license suspended, revoked, has failed to pay a reparation award, or has been found to have committed repeated and flagrant violations of the PACA. You should contact the
PACA regional office that covers your geographic location for more specific information on licensing and employment restrictions and related bonding requirements.
Under section 4(b), a person found to be responsibly connected with a violator firm is prohibited from obtaining a PACA license within a 2-year period following the effective date of the sanction. After the end of the 2-year period, the person can apply for a license, but will be required to post a surety bond or an equivalent cash surety under section 4(c) of the PACA in an amount satisfactory to the Secretary of Agriculture as a prerequisite to the issuance of the license. A
sample 4(c) Bond Form is available.
Under section 8(b), a person found to be responsibly connected with a firm whose license has been suspended or who has failed to pay a reparation award may be employed by another PACA licensee immediately following the effective date of the sanction if the employing firm posts a surety bond. A person found to be responsibly connected with a firm whose license has been revoked or who has been found to have committed any flagrant or repeated violation of section 2 of the PACA may be employed by another PACA licensee after 1 year following the effective date of the sanction. As a prerequisite to a restricted person's employment, the employing firm must post a surety bond or an equivalent cash surety in an amount satisfactory to the Secretary as an assurance that applicant's business will be conducted in accordance with the PACA. Employment restrictions and resulting bond requirements also apply in situations where a restricted person is affiliated with other PACA licensees as owner, partner, officer, director, stockholder, etc. A
sample 8(b) Bond Form, a
sample 8(b) Self Employment Bond Form, and a
sample 8(b) Cash Surety Form are available.
Under section 4(a), a firm's PACA license automatically terminates when the firm's Plan of Reorganization (Plan) is confirmed by the bankruptcy court. If the firm continues to operate subject to the PACA after the Plan's confirmation, it must be re-licensed. As a prerequisite to the issuance of that license, the firm may also be required to post a surety bond under section 4(e) of the PACA.
Under section 4(e), the Secretary may refuse to issue a license to an applicant if he finds that the applicant has been involved in bankruptcy proceedings within 3 years prior to the date of application. The Secretary, however, may issue a license if the applicant furnishes a surety bond or an equivalent cash surety in an amount satisfactory to the Secretary as an assurance that applicant's business will be conducted in accordance with the PACA. A
sample 4(e) Bond Form and a
sample 4(e) Cash Surety Form are available.
If you choose to post a bond, the surety must be a company holding a Certificate of Authority from the Secretary of the Treasury to issue surety bonds (6 U.S.C. Section 6-13). The surety listing can be found at:
