Grain Dealers Regulatory Compilation – Center for Agricultural and Shale Law

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Grain Dealer Regulations - Failure

What is Failure?

Failure occurs when a grain dealer cannot provide payment for the grain previously agreed to with a producer. Failure can also occur when a dealer does not have enough commodity/grain on hand to fulfill orders or contracts with a purchaser. Most state statutes focus on the failure of payment to a producer.

Which States Have Failure Statutes?

Of the thirty-four states which have created legislation aimed at regulating grain dealers, fifteen states have statutes regarding failure of grain dealers: Arkansas, Idaho, Illinois, Iowa, Louisiana, Michigan, Mississippi, Missouri, Montana, Nevada, North Dakota, Ohio, South Dakota, Tennessee, and Washington.

What are the Types of Provisions in Failure Statutes?

Each state that includes a failure statute for grain dealers generally has the following provisions included:

Insolvency—When a grain dealer has been found to be insolvent by notice from a producer or other evidence, the state commissioner will take steps to remedy the situation.
Liquidation—Liquidation involves selling assets for cash. Liquidation of a grain dealer’s assets may be necessary if the grain dealer is unable to pay creditors or honor previous contracts.

What is Typical of Each Provision?

Insolvency
- Appointment—When the board is notified of insolvency, a receiver or trustee is appointed to handle the grain dealer’s assets. Some states do not include language appointing a receiver or trustee, but authorize the commissioner to take charge of the property.
- Seizure of Assets—Most states include language detailing the process for seizing assets. In some states, the commissioner must obtain written consent of secured parties or lienholders before seizing the property.

Liquidation
- Notice—Generally, before liquidation of assets begins, the state will notify all potential claimants to help establish valid claims on the dealer’s property or pending debts owed by the grain dealer to purchasers. Other notices may be sent out at various stages of the liquidation process, depending on the state.
- Expense—Most states allow their department to be reimbursed from the grain dealer’s assets for any expenses incurred during the process of liquidation.
- Distribution—The order of distribution to creditors and other claimants will depend on their priority, usually determined by the director of agriculture or a court-approved report submitted by the commission.

State-by-State Statutory Language for Each Provision

Arkansas

Insolvency

“(a) Following the suspension of a dealer’s license under this chapter, the State Plant Board may file a verified petition in a court of competent jurisdiction requesting the appointment of a receiver to take custody of the assets of the dealer and provide for the disposition of the assets under the supervision of the court.

(b) A petition for the appointment of a receiver shall be filed in the county in which the dealer is located.

(c) Upon receiving a petition for the appointment of a receiver under this section, a court may issue any temporary orders necessary to preserve or protect the assets in receivership, the value of the assets in receivership, and the rights of the dealer’s creditors until a plan of disposition is approved.

(d) The board may be appointed as receiver in an action brought under this section.”

Ark. Code Ann. § 2-24-110 (2024)

Liquidation

N/A

Illinois

Insolvency

“Upon the failure of a licensee, the Director has all powers as Trustee for the benefit of claimants as established under this Code, including, but not limited to, the power to do the following:

(a) Seize or otherwise gain possession or control of grain assets (except the Department may not seize or otherwise gain possession or control of any equity asset on which there is a valid security interest or other lien without the prior, written permission of the secured party or lien holder), equity assets, and collateral and enforce the lien set forth in Section 20-10.

(b) Protect the grain assets, equity assets (to the extent the Department has received the written permission of any secured party or lien holder to take possession and control of the equity asset), and collateral of or relating to a failed licensee in the possession or under the control of the Department for the benefit of claimants, secured parties, and lien holders.

(c) Liquidate and collect upon all grain assets, equity assets (except the Department may not liquidate and collect upon any equity asset on which there is a valid security interest or other lien without the prior, written permission of the secured party or the lien holder), collateral and guarantees posted with the Department of or relating to a failed licensee, and deposit the proceeds into the Trust Account.

(d) Establish accounts in federally insured financial institutions and hold all moneys received as trustee.

(e) Request the transfer of moneys from the Fund to the Trust Account for the purpose of payment to claimants in accordance with Section 25-10.

(f) Disburse the funds in the Trust Account in accordance with this Code.”

240 Ill. Comp. Stat. 40/20-5 (2025)

Liquidation

“Upon the failure of a licensee, the Director has all powers as Trustee for the benefit of claimants as established under this Code, including, but not limited to, the power to do the following:

…

240 Ill. Comp. Stat. 40/20-5 (2025)

When a licensee experiences a failure, the Department has the authority to and shall:

(a) Immediately post notice at all locations of the failed licensee stating that the licensee has experienced a failure and that the license has been terminated and is no longer effective.

(b) Immediately take physical control and possession of the failed licensee’s facility, including but not limited to all offices and grain storage facilities, books, records, and any other property necessary or desirable to liquidate grain assets and equity assets.

(c) Give public notice and notify all known potential claimants by certified mail of the licensee’s failure and the processes necessary to file grain claims with the Department as set forth in Section 25-5.

(d) Perform an examination of the failed licensee.

(e) Seize and take possession of, protect, liquidate, and collect upon all grain assets, collateral, and guarantees of or relating to the failed licensee and deposit the proceeds into the Trust Account. If at any time it appears, however, in the judgment of the Department that the costs of seizing and taking possession of, protecting, liquidating, and collecting upon any or all of the grain assets, collateral, and guarantees equals or exceeds the expected recovery to the Department, the Department may elect not to pursue seizing and taking possession of, protecting, liquidating, and collecting upon any or all of the assets.

(f) Seize, take possession of, protect, liquidate, and collect upon the equity assets of the failed licensee and deposit the proceeds into the Trust account if the Department has first obtained the written consent of all applicable secured parties or lien holders, if any. If at any time it appears, however, in the judgment of the Department that the costs of seizing and taking possession of, protecting, liquidating, and collecting upon any or all of the equity assets equals or exceeds the expected recovery to the Department, the Department may elect not to pursue seizing and taking possession of, protecting, liquidating, and collecting upon any or all of the equity assets. If the Department does not otherwise pursue seizing and taking possession of, protecting, liquidating, and collecting upon any of the equity assets, the Department may bring or participate in any liquidation or collection proceedings involving the applicable secured parties or other interested party, if any, and shall have the rights and remedies provided by law, including the right to enforce its lien by any available judicial procedure.

If an applicable secured party or lien holder does not consent to the Department seizing, taking possession of, liquidating, or collecting upon the equity assets, the secured party or lien holder shall have the rights and remedies provided by law or by agreement with the licensee or failed licensee, including the right to enforce its security interest or lien by any available judicial procedure.

(g) Make available on demand to an applicable secured party or lien holder the equity asset, to the extent the Department seized or otherwise gained possession or control of the equity asset, but the secured party or lien holder does not consent to the Department liquidating and collecting upon the equity asset.”

240 Ill. Comp. Stat. 40/20-15 (2025)

“(a) The Trustee shall pay from the Trust Account all reasonable expenses incurred by the trustee on or after the date of failure in reference to seizing, preserving, and liquidating the grain assets, equity assets, collateral, and guarantees of or relating to a failed licensee, including, but not limited to, the hiring of temporary field personnel, equipment rental, auction expenses, mandatory commodity check-offs, and clerical expenses.

(b) Except as to claimants holding valid claims, any outstanding indebtedness of a failed licensee that has accrued before the date of failure shall not be paid by the Trustee and shall represent a separate cause of action of the creditor against the failed licensee.

(d) To the extent assets are available under subsection (g) of Section 25-20 and upon presentation of documentation satisfactory to the Trustee, the Trustee shall transfer from the Trust Account to the Regulatory Fund an amount not to exceed the expenses incurred by the Department in performance of its duties under Article 20 of this Code, in reference to the failed licensee.

(e) The Department shall establish and maintain an Asset Preservation Account as provided in Section 205-410 of the Department of Agriculture Law of the Civil Administrative Code of Illinois that shall contain a maximum of $50,000. The funds in the Asset Preservation Account are to be used solely by the Trustee for the reasonable expenses incurred by the Department on or after the date of failure for preserving and liquidating grain assets, equity assets, collateral, and guarantees of or relating to a failed licensee, provided that the Department has made a determination that the benefit of preserving and liquidating the grain assets, equity assets, collateral, and guarantees exceeds the anticipated costs of the preservation and liquidation, and only to the extent that all liquid and available moneys in the Grain Indemnity Trust Account relating to the particular failure have been exhausted. The Asset Preservation Account shall be funded by the income earned on the assets in the Fund. The income must be transferred to the Asset Preservation Account on a monthly basis, within 10 business days after the end of each calendar month, and to the extent necessary to maintain the $50,000 balance. The Trustee, or his or her designee, must file a report of all receipts by and disbursements from the Asset Preservation Account with the Board prior to each meeting of the Board.”

240 Ill. Comp. Stat. 40/20-20 (2025)

“(a) If, after a failure, the failed licensee does not transfer control of the grain assets to the Trustee, the Director may, in conjunction with the authority granted in this Code and in Section 205-410 of the Department of Agriculture Law (20 ILCS 205/205-410), file a complaint and apply to a court of competent jurisdiction for a temporary restraining order, a preliminary injunction, or a permanent injunction to be entered without bond to carry out the provisions of this Code.

(b) If a party seeks relief from a court of competent jurisdiction that would enjoin, restrain, stay, or otherwise resist either (1) an administrative order of the Department that suspends, revokes, or denies renewal of a license under this Code or (2) an action brought by the Department relating to liquidation of a licensee, the court shall require the party requesting the relief to provide a bond as provided for in the Code of Civil Procedure. The bond shall be in an amount adequate to assure that all producers and depositors will be paid while the licensee is operating following suspension, revocation, or denial of renewal of a license under the judicial relief for grain sold to or stored with the licensee. The bond shall be in a minimum amount sufficient to satisfy all existing grain obligations of the licensee for grain purchased, sold, or stored. In setting the amount of the bond, the court shall consider increasing the amount of the bond based upon a consideration of other factors, including, but not limited to, the total dollar amount of grain purchased annually by the licensee and the value of the storage obligations of the licensee.”

240 Ill. Comp. Stat. 40/20-25 (2025)

Iowa

Insolvency

“1. As used in this section:

a. ‘Grain dealer assets’ means the same as defined in section 203.12A, including any proceeds from a deficiency bond or irrevocable letter of credit, or any insurance policy relating to those assets.

b. ‘Interested seller’ means a person who delivers or has delivered grain to a grain dealer who has not been paid as provided in section 203.8 or according to the terms of a credit-sale contract breached by the grain dealer.

c. ‘Issuer’ means a person who issues a deficiency bond or an irrevocable letter of credit pursuant to section 203.3, or an issuer of grain assets.

2. a. The department may file a verified petition in district court requesting that the department be appointed as a receiver, and the district court shall appoint the department as receiver, in order to protect interested sellers, if any of the following apply:

(1) The grain dealer’s license is revoked or suspended under section 203.10.

(2) There is evidence that the grain dealer has engaged or is engaging in business under this chapter without obtaining a license as required pursuant to section 203.3.

b. Upon being appointed as a receiver, the department shall take custody and provide for the disposition of the grain dealer assets of the grain dealer under the supervision of the court.

(1) The petition shall be filed in the county in which the grain dealer maintains its principal place of business in this state. The court may issue ex parte any temporary order as it determines necessary to preserve or protect the grain dealer assets and the rights of interested sellers.

(2) The petition shall be accompanied by the department’s plan for disposition of grain dealer assets which shall provide terms as may be necessary to preserve or protect the grain dealer assets and the rights of interested sellers, less expenses incurred by the department in connection with the receivership. The plan may provide for the delivery or sale of grain as provided in section 203C.4. The plan may provide for the operation of the business of the grain dealer on a temporary basis and any other course of action or procedure which will serve the interests of interested sellers.

(3) The petition shall be filed with the clerk of the district court who shall set a date for a hearing in the same manner as provided in section 203C.3.

(4) Copies of the petition, the notice of hearing, and the department’s plan of disposition shall be delivered to the following:

(a) The grain dealer and each issuer who shall receive copies delivered in the manner required for service of an original notice.

(b) Interested sellers as determined by the department who shall receive copies delivered by ordinary mail.

(5) The failure of a person to receive the required notification shall not invalidate the proceedings on the petition or any part of the petition for the appointment of the department as the receiver.

(6) A person is not a party to the action unless admitted by the court upon application.

3. When appointed as a receiver, the department shall publish notice of the appointment in the same manner provided in section 203C.3.

4. The department may employ or appoint a person to appear on behalf of the department in any proceedings before the court as provided in section 203C.3.

5. An action of the department shall not be subject to the provisions of chapter 17A. A person employed or appointed by the department as receiver shall be deemed to be an employee of the state as defined in section 669.2. Chapter 669 is applicable to any claim as defined in section 669.2 against the person carrying out the duties of the department acting as receiver.

6. When the department is appointed as a receiver, the issuer shall be joined as a party, and may be ordered by the court to pay indemnification proceeds, and shall be discharged from further liability as provided in section 203C.4. The department shall provide notice to interested sellers within one hundred twenty days after the date of appointment. A failure of a person to file a timely claim as provided by the department shall defeat the claim, except to the extent of any excess grain dealer assets remaining after all timely claims are paid in full …”

Iowa Code § 12B (2025)

Liquidation

“… 7. If the court approves the sale of grain, the department shall employ or appoint a merchandiser who shall enjoy the same status, exercise the same powers, and receive compensation to the same extent as a merchandiser employed or appointed pursuant to section 203C.4. A person employed or appointed as a merchandiser must meet the following requirements:

a. Be experienced or knowledgeable in the operation of grain dealers as provided in this chapter.

b. Be experienced or knowledgeable in the marketing of grain.

c. Not have had a grain dealer’s license issued pursuant to section 203.3 suspended or revoked as provided in section 203.10.

d. Not have any pecuniary interest in the grain dealer assets of the grain dealer and not have a business relationship with the grain dealer.

8. The sale of the grain shall proceed in the same manner as grain sold pursuant to section 203C.4. The department may, with the approval of the court, continue the operation of all or any part of the business of the grain dealer on a temporary basis and take any other course of action or procedure which will serve the interests of interested sellers.

The department is entitled to reimbursement out of grain dealer assets for costs directly attributable to the receivership. The department shall be reimbursed from the grain dealer assets in the same manner as provided in section 203C.4. If the approved plan of disposition requires a distribution of cash proceeds, the department shall submit to the court a proposed plan of distribution of those proceeds. The plan shall be approved and executed and the department shall be discharged and the receivership terminated in the same manner as provided in section 203C.4.”

Iowa Code § 12B (2025)

Louisiana

Insolvency

“A. The commissioner, with the prior approval of the commission, may institute legal proceedings by petition in the district court for the district in which the licensee is located for an order authorizing the commissioner to effect a seizure of the facilities of the licensee and to act as receiver thereof whenever any of the following conditions occur:

(1) The licensee does not have sufficient commodities to cover the outstanding warehouse receipts and scale tickets marked for storage issued by the licensee.

(2) The licensee does not have sufficient funds to operate its business and is in imminent danger of being unable to continue to operate its business.

(3) The licensee is unable to fulfill its obligations to producers.

(4) The licensee refuses to submit to a lawful inspection or audit ordered by the commission.

B. Immediately upon the filing of the petition alleging the commission’s approval and the existence of any condition set forth in Subsection A of this Section, the court shall issue an ex parte order authorizing the commissioner to effect a temporary seizure of the facilities of the licensee and to act as temporary receiver thereof. This order shall remain in effect until the conclusion of a hearing on the petition which hearing shall be held within ten days after the filing of the petition.

C. The commission may require, on an emergency basis without the necessity of court approval for a period of not more than five days, any licensee to operate under its supervision prior to or during any proceedings leading to the appointment of a receiver as provided under this Section.

D. Whenever the commissioner is appointed to act as receiver he shall continue to act as receiver until all of the assets of the licensee have been distributed to the creditors of the licensee or until ordered by the district court to surrender possession of the assets of the licensee.

E. As part of the receivership, the commissioner may recover from the assets of the licensee the costs of administering the receivership, including the cost of liability insurance for the commission, the commissioner, and employees who are engaged in the administration of the receivership.”

La. Stat. Ann. § 3:3407 (2024)

Liquidation

“D. Whenever the commissioner is appointed to act as receiver he shall continue to act as receiver until all of the assets of the licensee have been distributed to the creditors of the licensee or until ordered by the district court to surrender possession of the assets of the licensee.

La. Stat. Ann. § 3:3407 (2024)

Michigan

Insolvency

“(3)(d) In the event of a failure of a grain dealer, the lien claims of all claimants of that grain dealer are considered assigned by operation of this section to the department, and in the event of a failure and subsequent liquidation, the lien attaches to assets or proceeds of assets that are either received or liquidated by the department.

(3) Except as provided in subsection (4), and subject to subsection (6), in the event of a failure of a grain dealer, the director shall enforce the claims of each lienholder under this section against the farm produce assets of the grain dealer and allocate the proceeds as follows:

(a) The director shall give first priority to allocating the proceeds equally to claimants described in subsection (1)(a), (b), and (c).

(b) If any proceeds remain after satisfying the claims described in subdivision (a), the director shall give second priority to allocating the remaining proceeds first to claimants that possess secured price later agreements and then to all remaining claimants that possess price later agreements.

(c) If any proceeds remain after satisfying the claims described in subdivisions (a) and (b), the director shall give third priority to allocating the remaining proceeds to claimants that possess acknowledgment forms, similar farm produce delivery contracts, or other written evidence of the sale of farm produce and that completed delivery and pricing of the farm produce in the 30-day period preceding the date of the failure of the grain dealer.

(d) If any proceeds remain after satisfying the claims described in subdivisions (a) to (c), the director shall give fourth priority to allocating the remaining proceeds on a pro rata basis to all other claimants that possess written evidence of the sale of farm produce to the grain dealer.

(e) If any proceeds remain after satisfying the claims described in subdivisions (a) to (d), the director shall distribute those proceeds jointly to the grain dealer and any secured parties.

(4) In the event that an adversary proceeding is commenced to recover farm produce assets on which a lien described in this section is attached and the department declines to enter the proceeding, the director, if he or she receives an application from a claimant that holds a lien under this section, shall assign to the claimant the applicable lien to permit the claimant to pursue the claimant’s lien in the adversary proceeding, to the extent that assignment will not delay the resolution of the proceeding, the prompt liquidation of the assets, or the ultimate distribution of the assets of all claimants.”

Mich. Comp. Laws § 285.86 (2025)

Liquidation

“(5) In the event of the failure of a grain dealer, the department shall liquidate the farm produce assets of the grain dealer to satisfy valid claims of claimants described in subsection (3) by taking possession of all farm produce in the grain dealer facility, distributing or selling the farm produce, and distributing the proceeds under subsection (3).”

Mich. Comp. Laws § 285.86 (2025)

Mississippi

Insolvency

“If a grain dealer should fail or refuse to make payment to a producer for grain purchased when such payment is requested by the producer and the request is made within one hundred sixty (160) days of the date of sale or the date of delivery of such grain to the dealer, whichever is later, but in case of deferred pricing, delayed pricing, priced-later, or similar contractual arrangements, no more than two hundred seventy (270) days after the date of delivery, the producer may notify the commissioner in writing, by certified mail when possible, of such failure or refusal within the period of one hundred sixty (160) days or ten (10) days thereafter. The commissioner upon receiving such notice shall take whatever action is necessary. The producer furnishing such written notice within the prescribed length of time is entitled to the benefits of the grain dealer’s bond. However, if a producer fails to furnish written notice to the commissioner within the prescribed time, then such producer is not entitled to any benefits under the grain dealer’s bond. Grain dealer liability under priced-later contracts, open-priced contracts, deferred price contracts, or similar agreements shall accrue under the bond in effect at the date of default as determined by the commissioner.”

Miss. Code Ann. § 75-45-311 (2025)

Liquidation

N/A

Missouri

Insolvency

“6. If at any time, the director, whether or not he or his authorized agent has possession as authorized by this section, has evidence that a dealer is insolvent or is unable to satisfy the claims of all sellers, the director may petition the circuit court for the appointment of a receiver to operate or liquidate the business of the dealer in accordance with law.”

Mo. Rev. Stat. § 276.501(6) (2025)

Liquidation

Mo. Rev. Stat. § 276.501(6) (2025)

Montana

Insolvency

“(1) If a commodity dealer files for bankruptcy, a contract or any part of a contract for delivery of a commodity may be canceled without penalty to the producer if the cancellation involves only the remaining unperformed portions of the contract. A cancellation under this section:

(a) is not a breach of contract;

(b) is allowed even if not explicitly provided for in the contract.

(2) In the event of a cancellation, a commodity dealer remains responsible for payment that is due to the producer for delivered portions of the contract.”

Mont. Code Ann. § 80-4-419 (2023)

“(1) If the department finds that a commodity dealer has failed to comply with the terms of a written contract or has failed to pay for a commodity purchase under an oral agreement in the manner and within the time provided in 80-4-608, the department may petition the district court of the first judicial district, Lewis and Clark County, for an order authorizing the department to seize and take possession of:

(a) any agricultural commodities in the facilities owned, operated, or controlled by the commodity dealer;

(b) all books, papers, and property used in connection with the operation of the commodity dealer business; and

(2) If during or after an audit or at any other time the department has evidence that the commodity dealer is insolvent or is unable to satisfy the claims of all commodity dealer creditors covered by the bond, the department may petition the district court of the first judicial district, Lewis and Clark County, for the appointment of the department to operate or liquidate the business of the commodity dealer.

(3) All necessary expenses incurred by the department in carrying out the provisions of this part may be recovered at the discretion of the department from:

(a) the bond;

(b) the assets of the licensee;

(d) in a separate civil action brought by the department in the first judicial district court.

(4) The department is authorized to include as part of the recoverable expenses the cost of adequate liability insurance necessary to protect the department, its officers, and others engaged in carrying out the provisions of this part.”

Mont. Code Ann. § 80-4-612 (2023)

Liquidation

“Revenue based on actual expenses received from the liquidation of commodity dealers and public warehouse operators, as authorized in 80-4-538 and 80-4-612, and from deficiency fees, authorized in 80-4-503, must be deposited in the account established in 80-4-415 and is statutorily appropriated, as provided in 17-7-502, to the department for the purposes of this chapter. Funds deposited under this chapter must be used to pay actual expenses incurred in the liquidation of commodity dealers and public warehouse operators or for the correction of storage deficiencies. Actual expenses include but are not limited to legal fees, court costs, travel expenses, per diem, and communication.”

Mont. Code Ann. § 80-4-416 (2023)

Nevada

Insolvency

“If any licensed dealer, broker or commission merchant for any reason ceases to operate as such, the amount of money or securities deposited in lieu of a bond must be retained by the Department for 1 year. If after the expiration of 1 year after the cessation of such operation, no legal action has been commenced to recover against the money or securities, they must be delivered to the owner. If a legal action has been commenced within that time, all the money and securities must be held by the Department subject to the order of the district court.”

Nev. Rev. Stat. § 576.045 (2025)

“1. The Department may refuse to grant or renew a license or may suspend or revoke a license if, after notice and a hearing, the Department is satisfied of the existence of any of the following facts, the existence of which is hereby declared to be a violation of this chapter:

(a) That the applicant or licensee has intentionally made any false or misleading statement concerning the conditions of the market for any farm products.

(b) That the applicant or licensee has made fictitious sales or has been guilty of collusion to defraud the producer.

(d) That the applicant or licensee has in the handling of any farm products been guilty of fraud, deceit or willful negligence.

(e) That the licensee, without reasonable cause, has failed or refused to execute or carry out a lawful contract with a producer.

(f) That the licensee, without reasonable cause, has issued checks for the payment of farm products received without sufficient money to cover them or has stopped payment on a check given in payment for farm products received.

(g) That the licensee, without reasonable cause, has failed to account or make payment for farm products as required by this chapter.

(h) That the licensee has knowingly employed an agent without causing the agent to comply with the licensing requirements of this chapter applicable to agents.

(i) That the licensee has failed or refused to maintain and file records as required by this chapter.

(j) That the licensee has failed or refused to maintain a bond or other security as required by the provisions of NRS 576.040.

2. The Department may suspend, pending inquiry, for not longer than 30 days, and after hearing or investigation may refuse to grant, renew or revoke any license as the case may require, if it is satisfied that the licensee has become bankrupt or insolvent, and is thereby unable to pay producer-creditors of the licensee, or producers with whom the licensee has executory or executed contracts for the purchase of farm products, or for the handling of farm products on consignment.

3. A license is suspended automatically, without action of the Department, if the bond filed pursuant to subsection 1 of NRS 576.040 is cancelled, and remains suspended until the bond is renewed.

4. In the case of any hearing held under the provisions of this section, there must be filed in the office of the Department a memorandum stating briefly the reasons of the Department for the denial, suspension or revocation of the license, but formal findings of fact need not be made or filed.”

Nev. Rev. Stat. § 576.120 (2025)

Liquidation

N/A

North Dakota

Insolvency

“A licensee is insolvent when the licensee refuses, neglects, or is unable upon proper written demand, including electronic communication, to pay for grain purchased or marketed by the licensee or is unable to make redelivery upon proper written demand, including electronic communication. The licensee may not assess receiving or redelivery fees on grain.”

N.D. Cent. Code § 4.1-59-21 (2025)

“1. Upon the insolvency of a licensee, a trust fund must be established for the benefit of noncredit-sale receiptholders and to pay the costs incurred by the commissioner in the administration of the insolvency. The trust fund consists of the following:

a. Nonwarehouse receipt grain of the insolvent licensee held in storage or the proceeds obtained from the conversion of the grain.

b. The proceeds, including accounts receivable, from any grain sold from the time of the filing of the claim that precipitated an insolvency until the commissioner is appointed trustee must be remitted to the commissioner and included in the trust fund.

c. The proceeds of insurance policies on destroyed grain.

d. The claims for relief, and proceeds from the claims for relief, for damages upon bond given by the licensee to ensure faithful performance of the duties of a licensee.

e. The claim for relief, and proceeds from the claim for relief, for the conversion of any grain stored in the warehouse.

f. Unencumbered accounts receivable for grain sold before the filing of the claim that precipitated an insolvency.

g. Unencumbered equity in grain hedging accounts.

h. Unencumbered grain product assets.

2. Upon the insolvency of a grain buyer, the commissioner shall act as trustee of the trust fund.

3. All funds received by the commissioner as trustee must be deposited in the Bank of North Dakota.”

N.D. Cent. Code § 4.1-59-22 (2025)

“1. Upon the commissioner’s appointment, the commissioner may take possession of relevant books and records of the licensee.

2. If the insolvency involves a roving grain buyer, the commissioner shall publish a notice of the commissioner’s appointment once each week for two consecutive weeks in all daily newspapers in the state and may notify, by ordinary mail, the holders of record of outstanding receipts and those that are potential credit-sale contract claimants, disclosed by the licensee’s records.

3. If the insolvency involves a grain processor, the notice must be published once each week for two consecutive weeks in a newspaper in the county in which the facility is located.

4. The notice must require outstanding receiptholders and credit-sale contract claimants to file claims with the commissioner along with the receipts, contracts, or other evidence of the claims required by the commissioner.

5. If an outstanding receiptholder or credit-sale contract claimant fails to submit a claim within forty-five days after the last publication of the notice or a longer time set by the commissioner, the commissioner is relieved of further duty in the administration of the insolvency on behalf of the receiptholder or credit-sale contract claimant and the receiptholder may be barred from participation in the trust fund, and the credit-sale contract claimant may be barred from payment for any amount due.

6. Outstanding receiptholders and credit-sale contract claimants are not parties to the insolvency action unless admitted by the court upon a motion for intervention.”

N.D. Cent. Code § 4.1-59-25 (2025)

“A receiptholder does not have a separate claim for relief upon any insolvent licensee’s bond, for insurance, against any person converting grain, nor against any other receiptholder, except through the trustee, unless, upon demand of five or more receiptholders, the commissioner fails or refuses to apply for the commissioner’s own appointment or unless the district court denies the application. This chapter does not prohibit a receiptholder, either individually or with other receiptholders, from pursuing concurrently any other remedy against the person or property of the licensee.”

N.D. Cent. Code § 4.1-59-26 (2025)

“Upon the commissioner’s appointment, the commissioner shall marshall all trust fund assets. The commissioner may maintain suits in the name of the state of North Dakota for the benefit of all receiptholders against the licensee’s bonds, insurers of grain, any person that may have converted any grain, and any person that may have received preferential treatment by being paid by the insolvent licensee after the first default.”

N.D. Cent. Code § 4.1-59-27 (2025)

“1. Upon the receipt and evaluation of claims, the commissioner shall file a report showing the amount and validity of each claim after recognizing:

a. Relevant liens or pledges.

b. Relevant assignments.

c. Relevant deductions due to advances or offsets accrued in favor of the licensee.

d. Relevant cash claims or checks, the amount of the claim.

e. Relevant credit-sale contract or noncredit-sale contract, the amount remaining to be paid based on the terms of the contract.

2. The report also must contain the proposed reimbursement to the commissioner for the expenses of administering the insolvency, the proposed distribution of the trust fund assets to receiptholders, less expenses incurred by the commissioner in the administration of the insolvency, and the proposed credit-sale contract indemnity fund payments to credit-sale contract claimants. If the trust fund is insufficient to redeem all receiptholder claims in full, the report must list the funds as prorated.

3. The commissioner shall set a hearing and the appropriate notice for interested persons to show cause why the commissioner’s report should not be approved and distribution of the trust fund be made as proposed. The commissioner shall serve copies of the report and notice of hearing by certified mail upon the licensee and the surety and by ordinary mail upon all persons having claims filed with the commissioner.

4. An aggrieved person having an objection to the commissioner’s report shall file the objection with the commissioner and serve copies on the commissioner, the licensee, and the surety at least twenty days before the hearing. Failure to file and serve objections in the time set is a waiver of the objection.

5. Following the hearing, the commissioner shall approve or modify the report and issue an order directing payment of the necessary bond proceeds, distribution of the trust fund, payments from the credit-sale contract indemnity fund, and discharge of the commissioner from the commissioner’s trust.

6. If an aggrieved person still has objection with commissioner’s report after hearing the person may appeal to district court.”

N.D. Cent. Code § 4.1-59-29 (2025)

Liquidation

“Upon the commissioner’s determination continued operation of a grain buyer is likely to result in probable loss of assets to receiptholders, the commissioner may immediately suspend, close, or take control of the assets held in a trust fund described in section 4.1-59-22, or take any combination of these actions as the commissioner deems necessary to begin an orderly liquidation of those trust fund assets as provided in this chapter.”

N.D. Cent. Code § 4.1-59-03 (2025)

Ohio

Insolvency

“(A) Whenever the director of agriculture determines that a licensed handler does not have in his possession sufficient agricultural commodities to cover the outstanding receipts and tickets issued or assumed by him under a bailment agreement, or when the licensed handler refuses to submit his records or property to lawful inspection as provided under this chapter, the director may give notice to the licensed handler to:

(1) Cover such shortage;

(2) Furnish bond as required by the director;

(3) Submit to such inspection as the director considers necessary.

(B) If the licensed handler fails to comply with the terms of the notice within twenty-four hours from the date of its issuance, or within such further time as the director may allow, the director may petition the court of common pleas of the county where the licensed handler’s principal place of business is located, as shown by the license application, for an order authorizing the director to seize and take possession of all or a portion of the agricultural commodities located in the warehouse operated by the licensed handler and of all pertinent records and other property.

(C) Upon taking possession as provided in division (B) of this section, the director shall notify the holders of record, as shown by the licensed handler’s records, of all receipts and tickets issued for agricultural commodities, to present their receipts or tickets for inspection, or to account for the same. The director may thereupon cause an audit and other investigation to be made of the affairs of the licensed handler, especially with respect to the agricultural commodities in which there is an apparent shortage, to determine the amount of such shortage and compute the shortage as to each depositor as shown by the licensed handler’s records, if practicable.

(D) The director shall retain possession obtained under this section until such time as the licensed handler or the surety on any bond, required by the director under authority of division (A)(2) of this section, has satisfied the claims of all depositors, or until such time as the director is ordered by the court to surrender possession.

(E) If during or after the audit or other investigation provided for in this section, or at any other time, the director has evidence that the licensed handler is insolvent or is unable to satisfy the claims of all depositors, the director may petition the court of common pleas for the appointment of a receiver to operate or liquidate the business of the licensed handler.

(F) At any time within ten days after the director takes possession, the licensed handler may serve notice upon the director to appear in the court of common pleas of the county in which such warehouse is located at a time to be fixed by such court, which shall not be less than five, nor more than fifteen, days from the date of the service of such notice, and show cause why such possession should not be restored to the licensed handler.

(G) All necessary expenses incurred by the director or any receiver appointed under division (E) of this section may be recovered from the licensed handler in separate civil action brought by the director in the court of common pleas or recovered at the same time and as a part of the seizure or receivership action filed under this section. As a part of the expenses so incurred, the cost of adequate liability insurance necessary to protect the director, the receiver, and others engaged in carrying out this section may be included.”

Ohio Rev. Code Ann. § 926.14 (2025)

Liquidation

“If the director of agriculture obtains evidence that an unlicensed handler is insolvent or is unable to satisfy the claims of all depositors, the director may petition the court of common pleas of the county in which the unlicensed handler is located for the appointment of a receiver to operate or liquidate the business of the unlicensed handler …

All necessary expenses incurred by the director or a receiver appointed under this section may be recovered from the unlicensed handler in a separate civil action brought by the director in the court of common pleas or recovered at the same time and as a part of the receivership action filed under this section. As a part of the expenses so incurred, the cost of adequate liability insurance necessary to protect the director, the receiver, and others engaged in carrying out this section may be included.”

Ohio Rev. Code Ann. § 141 (2025)

South Dakota

Insolvency

“The commission may immediately suspend the license of a grain buyer and the grain buyer shall surrender the license to the commission if:

(1) The grain buyer refuses, neglects, or is unable, upon proper demand, to redeem any scale ticket issued by the grain buyer, through redelivery or cash payment;

(2) The grain buyer refuses, neglects, or is unable to provide a bond in an amount required by the commission;

(3) The commission has knowledge of any act of insolvency, including the filing of a petition in bankruptcy naming the grain buyer as debtor; or

(4) The grain buyer refuses to submit to an inspection or cooperate with the lawful requests of a commission inspector, including requests for access to and copies of the books and records of the grain buyer.

Within fifteen days the grain buyer may request a hearing pursuant to chapter 1-26 to determine if the license should be revoked. If no request is made within fifteen days, the commission shall revoke the license.”

S.D. Codified Laws § 49-45-16 (2025)

“If the commission determines that it is necessary, the commission may apply to the circuit court in the county in which the grain buyer operates or operated for that court to appoint a receiver. The receiver shall have such powers and duties as the court may direct.”

S.D. Codified Laws § 49-45-16.1 (2025)

Liquidation

N/A

Tennessee

Insolvency

“(a) If it is discovered that any commodity dealer or warehouseman is insolvent, or that its continuance in business will seriously jeopardize the interest of its creditors or commodities depositors, it is the duty of the commissioner to close that dealer or warehouseman and to take charge of all the property and effects thereof, and to notify the surety. Upon taking charge of any such dealer or warehouseman, the commissioner shall, as soon as practicable, ascertain by a thorough examination into its affairs, its actual financial condition, and whenever the commissioner becomes satisfied that the commodity dealer or warehouseman cannot resume business or liquidate its indebtedness to the satisfaction of its creditors, the commissioner shall report the fact of its insolvency to the attorney general and reporter, who shall immediately upon receipt of this notice institute proper proceedings in the proper court for the purpose of having a receiver appointed.

(b) With the exception of incidental commodity dealers, nonsecured, if a commodity dealer or warehouseman fails or refuses to make payment for or deliver to a producer for commodities when requested, the producer shall notify the commissioner in writing of the failure or refusal within one hundred sixty (160) days of the date of sale or the date of delivery of the commodities to the commodity dealer or warehouseman, whichever is later, but in case of deferred pricing, delayed pricing, priced later, or similar contractual arrangements, no more than two hundred seventy (270) days after the date of delivery. The commissioner, upon receiving this notice, shall take whatever action is necessary. The producer furnishing written notice within the prescribed length of time is entitled to the benefits of the commodity dealer’s or warehouseman’s bond if such bond is required in accordance with § 43-32-106. However, if a producer fails to furnish written notice to the commissioner within the prescribed time, then that producer is not entitled to any benefits under the commodity dealer’s or warehouseman’s bond and part 2 of this chapter. Commodity dealer liability under price later contracts, open price contracts, deferred price contracts, or similar agreements shall accrue under the bond in effect at the date of default as determined by the commissioner.

(c) With the exception of incidental commodity dealers, nonsecured, when the commissioner has determined that a commodity dealer has defaulted payment to producers for commodities that the dealer has purchased from them, or that a warehouseman failed to deliver value for commodities stored, the commissioner shall determine through appropriate legal procedures the producers and the amount of defaulted payment, and as trustee of the bond, shall immediately after such determination call for the commodity dealer’s surety bond or bonds to be paid to the commissioner for distribution to those producers who should receive the benefits. Should the defaulted amount owed producers be less than the principal amount of the bond or bonds, then the surety shall be obligated to pay only the amount of the default.

(d) Notwithstanding subsections (b) and (c), an incidental commodity dealer, nonsecured, by opting not to maintain a security instrument, causes the producers from whom the dealer purchases commodities to be ineligible to receive indemnification from the Tennessee grain indemnity fund in the event the dealer fails to make payment for the commodities delivered to the dealer.”

Tenn. Code Ann. § 43-32-108 (2024)

“The commissioner, upon determining that a commodity dealer or warehouseman has defaulted payment or failed, has the duty under this part, in addition to any other duties granted to the commissioner by law, to:

(1) Request the transfer of moneys from the Tennessee grain indemnity fund when necessary for the purpose of compensating claimants in accordance with § 43-32-210;

(2) Hold in trust any assets of a failed commodity dealer or warehouseman for the purposes of repayment of the Tennessee grain indemnity fund moneys used to pay claimants; any repayment to the appropriate indemnity fund shall not exceed the principal amount paid to claimants; and

(3) In the event that the amount in the Tennessee grain indemnity fund is insufficient to pay all valid claims in accordance with § 43-32-210, pay valid claims based on a pro rata share of available funds.”

Tenn. Code Ann. § 43-32-211 (2024)

Liquidation

“(a) … Upon taking charge of any such dealer or warehouseman, the commissioner shall, as soon as practicable, ascertain by a thorough examination into its affairs, its actual financial condition, and whenever the commissioner becomes satisfied that the commodity dealer or warehouseman cannot resume business or liquidate its indebtedness to the satisfaction of its creditors, the commissioner shall report the fact of its insolvency to the attorney general and reporter, who shall immediately upon receipt of this notice institute proper proceedings in the proper court for the purpose of having a receiver appointed.”

Tenn. Code Ann. § 43-32-108 (2024)

Washington

Insolvency

N/A

Liquidation

“Upon the failure of a grain dealer or warehouse operator, the statutory lien created in RCW 22.09.371 shall be liquidated by the department to satisfy the claims of depositors in the following manner:

(1) The department shall take possession of all commodities in the warehouse, including those owned by the warehouse operator or grain dealer, and those that are under warehouse receipts or any written evidence of ownership that discloses a storage obligation by a failed warehouse operator, including but not limited to scale weight tickets, settlement sheets, and ledger cards. These commodities shall be distributed or sold and the proceeds distributed to satisfy the outstanding warehouse receipts or other written evidences of ownership. If a shortage exists, the department shall distribute the commodities or the proceeds from the sale of the commodities on a prorated basis to the depositors. To the extent the commodities or the proceeds from their sale are inadequate to satisfy the claims of depositors with evidence of storage obligations, the depositors have a first priority lien against any proceeds received from commodities sold while under a storage obligation or against any commodities owned by the failed warehouse operator or grain dealer.

(2) Depositors possessing written evidence of the sale of a commodity to the failed warehouse operator or grain dealer, including but not limited to scale weight tickets, settlement sheets, deferred price contracts, or similar commodity delivery contracts, who have completed delivery and passed title during a thirty-day period immediately before the failure of the failed warehouse operator or grain dealer have a second priority lien against the commodity, the proceeds of the sale, or warehouse-owned or grain dealer-owned commodities. If the commodity, commodity proceeds, or warehouse-owned or grain dealer-owned commodities are insufficient to wholly satisfy the claim of depositors possessing written evidence of the sale of the commodity to the failed warehouse operator or grain dealer, each depositor shall receive a pro rata share thereof.

(3) Upon the satisfaction of the claims of depositors qualifying for first or second priority treatment, all other depositors possessing written evidence of the sale of the commodity to the failed warehouse operator or grain dealer have a third priority lien against the commodity, the proceeds of the sale, or warehouse-owned or grain dealer-owned commodities. If the commodities, commodity proceeds, or warehouse-owned or grain dealer-owned commodities are insufficient to wholly satisfy these claims, each depositor shall receive a pro rata share thereof.

(4) The director of agriculture may represent depositors whom, under RCW 22.09.381, the director has determined have claims against the failed warehouse operator or failed grain dealer in any action brought to enjoin or otherwise contest the distributions made by the director under this section.”

Wash. Rev. Code § 22.09.391 (2024)