§ 25-10 — Claimant compensation

Within 30 days after the day on which a claim becomes a valid claim, a claimant shall be compensated to the extent of its valid claim as provided in this Section. It is the express intent of this legislation that each undisputed portion of a claim shall be paid in accordance with the deadlines of this Code, even if there are disputed portions of the claim. For example, the amount of a valid claim calculated for an "unpriced obligation" shall be paid to the claimant despite the fact that claimant additionally seeks the amount for a "priced obligation". Each claimant shall be compensated in accordance with the following provisions: (a) Valid claims filed by warehouse claimants shall be paid 100% of the amount determined by the Department out of the net proceeds of the liquidation of grain assets as set forth in this subsection (a). To the extent the net proceeds are insufficient, warehouse claimants shall be paid their pro rata share of the net proceeds of the liquidation of grain assets and, subject to subsection (j) of this Section, an additional amount per claimant not to exceed the balance of their respective claims out of the Fund. (b) Subject to subsection (j) of this Section, if the net proceeds as set forth in subsection (a) of this Section are insufficient to pay in full all valid claims filed by warehouse claimants as payment becomes due, the balance shall be paid out of the Fund in accordance with subsection (b) of Section 25-20. (c) Valid claims filed by producers who: (1) have delivered grain within 21 days before the date of failure, or the date of suspension if the suspension results in a failure, for which pricing of that grain has been completed before date of failure; or (2) gave written notice to the Department within 21 days of the date of delivery of grain, if the pricing of that grain has been completed, that payment in full for that grain has not been made; shall be paid, subject to subsection (j) of this Section, 100% of the amount of the valid claim determined by the Department. Valid claims that are included in subsection (c) of this Section shall receive no payment under subsection (d) of this Section, and any claimant having a valid claim under this subsection (c) determined by the Department to be in excess of the limits, if any, imposed under subsection (j) of this Section shall be paid only sums in excess of those limits to the extent additional money is available under subsection (d)(2) of Section 25-20. (d) Valid claims that are not included in subsection (c) of this Section that are filed by producers where the later date of completion of delivery or pricing of the grain is within 160 days before the date of failure shall be paid 85% of the amount of the valid claim determined by the Department or $250,000, whichever is less, per claimant. In computing the 160-day period, the phrase "date of completion of delivery" means the date of the last delivery of grain to be applied to the quantity requirement of the contract, and the phrase "the later date" means the date closest to the date of failure. In addition, for claims filed by producers for grain sold on a contract, the later of the date of execution of the contract or the date of delivery of the grain covered by the price later contract must not be more than 365 days before the date of failure in order for the claimant to receive any compensation. In computing the 365-day period, the phrase "the later of the date" means the date closest to the date of failure, and the phrase "date of delivery" means the date of the last delivery of grain to be applied to the quantity requirement of the price later contract. (e) Valid claims filed by producers for grain sold on a price later contract, for which the final price has not been established, shall be paid 85% of the amount of the valid claims determined by the Department or $250,000, whichever is less, per claimant, if the later of the date of execution of the contract or the date of delivery of the grain covered by the price later contract occurred not more than 365 days before the date of failure. In computing the 365-day period, the phrase "the later of the date" means the date closest to the date of failure, and the phrase "date of delivery" means the date of the last delivery of grain to be applied to the quantity requirement of the price later contract. The execution of subsequent price later contracts by the producer and the licensee for grain previously covered by a price later contract shall not extend the coverage of a claim beyond the original 365 days. (f) The maximum payment to producers under subsections (d) and (e) of this Section, combined, shall be $250,000 per claimant. (g) The following claims shall be barred and disallowed in their entirety and shall not be entitled to any recovery from the Fund or the Trust Account: (1) Claims filed by producers where both the date of completion of delivery and the date of pricing of the grain are in excess of 160 days before the date of failure. (2) Claims filed by producers for grain sold on a price later contract if the later of the date of execution of the contract or the date of delivery of grain in reference to the grain covered by the price later contract occurred more than 365 days before the date of failure. In computing the 365-day period, the phrase "the later of the date" means the date closest to the date of failure, and the phrase "date of delivery" means the date of the last delivery of grain to be applied to the quantity requirement of the price later contract. (3) Claims filed by any claimant that are based upon or acquired by fraudulent or illegal acts of the claimant. (h) To the extent moneys are available, additional pro rata payments may be made to claimants under subsection (d) of Section 25-20. (i) For purposes of this Section, a claim filed in connection with warehouse receipts that are possessed under a collateral pledge of a producer, or that are subject to a perfected security interest, or that were acquired by a secured party or lien holder under an obligation of a producer, shall be deemed to be a claim filed by the producer and not a claim filed by the secured party or the lien holder, regardless of whether the producer is in default under that collateral pledge, security agreement, or other obligation. (j) The maximum payment out of the Fund for claimants under subsection (a), (b) of this Section shall be $1,000,000 per claimant and the maximum payment out of the Fund for claimants under subsections (c), (d), and (e) of this Section, combined, shall be $1,000,000 per claimant. (k) The amounts to be paid to warehouse valid claimants and grain dealer valid claimants shall be calculated according to the following: (1) Valid claimants who have warehouse claims, or who have grain dealer claims for grain sold, delivered but unpriced as of the date of failure, shall have "unpriced obligations", and to determine the per bushel value of these valid claims the Department shall use an average of the cash bid prices on the date of failure from grain dealers located within the market area of the failed licensee, and the cash bid price offered by the failed licensee on the date of failure, less transportation, handling costs, and discounts applicable as of that date. (2) Valid claimants who have grain dealer claims for grain sold, delivered, and priced as of the date of failure shall have "priced obligations", and the price per bushel to be used in calculating the compensation due these valid claimants shall be that which has been agreed upon by the failed licensee and the claimant, less applicable discounts. For purposes of this item (2), a person has "priced" his or her grain if he or she has done those things necessary under the agreement to set, choose, or select a price for any portion of the grain under the agreement, without regard to whether he or she has received a check in payment for the grain, or could have received a check in payment for the grain, prior to the failure. (l) Arrangements whereby a producer agrees with a licensee to defer receipt of payment of amounts due from the sale of grain are covered by this Code and are not to be considered loans by the producer to the licensee, despite payments to the producer as an inducement for the leaving of moneys with the licensee, unless the licensee has executed and delivered to the producer a promissory note covering those amounts.

Legislative History

(Source: P.A. 93-225, eff. 7-21-03.)