(1)(a)
Before the commissioner may issue a license to a dealer, the applicant shall file
with the commissioner in the sum of not less than two thousand dollars nor more
than one million dollars, at the discretion of the commissioner:
(I)A bond executed by the applicant as principal and by a surety company
qualified and authorized to do business in this state as a surety; or
(II)An irrevocable letter of credit meeting the requirements of section 11-35-101.5.
(b)The bond or irrevocable letter of credit must be conditioned upon
compliance with this part 3 and section 35-36-104 and upon the faithful and honest
handling of farm products in accordance with this part 3 and shall cover any fees
due the department by the dealer and all costs and reasonable attorney fees
incident to
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(1) (a)
Before the commissioner may issue a license to a dealer, the applicant shall file
with the commissioner in the sum of not less than two thousand dollars nor more
than one million dollars, at the discretion of the commissioner:
(I) A bond executed by the applicant as principal and by a surety company
qualified and authorized to do business in this state as a surety; or
(II) An irrevocable letter of credit meeting the requirements of section 11-35-101.5.
(b) The bond or irrevocable letter of credit must be conditioned upon
compliance with this part 3 and section 35-36-104 and upon the faithful and honest
handling of farm products in accordance with this part 3 and shall cover any fees
due the department by the dealer and all costs and reasonable attorney fees
incident to any suit upon the bond or irrevocable letter of credit. The bond or
irrevocable letter of credit must be to the department in favor of every producer,
dealer, small-volume dealer, or owner and, in the instance of a bond, must remain in
full force and effect until canceled by the surety upon thirty days' prior written
notice to the commissioner.
(c) (I) A producer, owner, small-volume dealer, or other dealer within the
state of Colorado claiming to be injured by the fraud, deceit, or willful negligence
of, or failure to comply with this part 3 or section 35-36-104 by, a dealer may
request the department, as beneficiary, to demand payment on the irrevocable
letter of credit or surety bond to recover the damages caused by the fraud, deceit,
willful negligence, or failure to comply.
(II) The surety on the bond or the issuer of the letter of credit is not liable to
pay a claim pursuant to an action brought under this part 3 if the action is not
commenced within five hundred forty-eight days, which is approximately eighteen
months, after the date of the transaction, as that term is described in section 35-36-305 (12), on which the claim is based, or the date of the loss, as that term is
defined in section 35-36-102 (20), whichever is later.
(III) A producer, owner, small-volume dealer, or other dealer is not eligible for
reimbursement from the bond or the irrevocable letter of credit for a claim
submitted pursuant to this section if, at the time the claim is submitted, the
producer, owner, small-volume dealer, or other dealer is:
(A) The owner of at least five percent of the voting shares, excluding
patronage interests, membership interests, partnership interests, or publicly traded
shares of the licensee whose failure is the basis of the claim; or
(B) The owner of at least five percent of the voting shares, excluding
patronage interests, membership interests, partnership interests, or publicly traded
shares of the parent corporation of the licensee whose failure is the basis of the
claim.
(d) When an action is commenced on the bond or irrevocable letter of credit,
the commissioner may require the licensee to file a new bond or irrevocable letter
of credit, and failure of the licensee to file the new bond or irrevocable letter of
credit within ten days after the commencement of the action constitutes grounds
for the suspension or revocation of the licensee's license.
(e) The commissioner shall not require a bond or irrevocable letter of credit
from a dealer who pays for farm products in cash or with a bank-certified check, a
bank cashier's check, an irrevocable electronic funds transfer, or a money order at
the time the dealer obtains from the owner of the farm products possession or
control of the farm products, or of an applicant for a license or a licensee operating
under a bond required by the United States to secure the performance of the
applicant's or licensee's obligations; except that the bond must include all
obligations pertaining to Colorado farm products, and the dealer shall furnish
documentary evidence to the commissioner that the bond required by the United
States is in full force and effect.
(f) The bond or irrevocable letter of credit required by section 35-36-216
must apply to the activities as a dealer of a person licensed pursuant to part 2 of
this article 36. The persons are also subject to this section and section 35-36-305.
(2) Whenever the commissioner determines that a previously approved bond
or irrevocable letter of credit is, or for any cause has become, insufficient, the
commissioner may require a dealer to furnish an additional bond or irrevocable
letter of credit or other evidence of financial responsibility to conform to the
requirements of this part 3 or any rule promulgated pursuant to this article 36. The
failure of the dealer to comply with the commissioner's requirement within thirty
days after written demand for compliance constitutes grounds for the suspension
or revocation of the dealer's license.