Legal Question in Business Law in Kentucky

I sold cattle to a bonded livestock dealer on Nov 2nd and was paid on the spot with a check drawn on their account at 5/3rd Bank, as has been my practice for over 10 years. The bank apparently closed the line of credit about the same time. My check was returned "Refer To Maker". Subsequently 5/3rd Bank filed litgation against the cattle broker (Eastern Livestoc, LLC.) and the court had a receiver appointed. According to all reports, the receiver is to conduct the liquidation of the company and to pay the secured creditor (5/3rd), with any balance to be prorated amoung the unsecured creditors. I understand that the UCC provides protection for the secured creditor under their security agreement against claims, even unpaid vender who extended credit to debtors. What I don't understand is how the bank can claim an interest in my cattle that were obtained by a bad check. Me along with about 250 small farmers sold cattle that day for a total of about $850,000.00. This is just out of my community! It now seems 5/3rd will profit from letting the company stay open one more day at the expense of a bunch of small farmers which even included kids selling a few calves to pay tuition. Obviously our legal fees would far exceed any recovery we might get from the bank. Some have suggested that we should have secured ourselves with a UCC-1 until the checks ckeared or demanded a cashier's check, both of which proves impracticial, in the fast paced exchange of livestock. The UCC provides protection for purchasers of good in the ordinary course of business. Does it not also protect sellers who were paid upon delivery of goods with a bad check from the blanket lien granted to the secured lender by the debtor? Please understand, no one had any warning this was about to happen. In over 10 years, not once had I ever had a problem getting paid. All we want from the bank is the proceeds that they obtained from the cattle exchanged for bad checks on the spot. Their seems to be $100,000,000.00 or more in bad checks written by this company all over the country. I think most of these represent checks that were paid to other dealers "on account". Our checks should not be included with unsecured creditors. Our cattle were obtained on the last day of business for this company. The proceeds can be traced and it can be proven that our cattle were obtained due to criminal act. How can the bank or even unsecured creditors get proceeds from the "poisoned fruit" of a crime, theft by deception. The USDA tells us we will probably get pennies on the dollar from the bond. Can anyone help?

1 Answer from Attorneys

Related Questions & Answers

More Business Law questions and answers in Kentucky

Looking for something else?