The PACA requires bonds to be posted by a licensee where the firm or one of its principals has been involved in bankruptcy or when a PACA licensee employs an individual who is under PACA employment restrictions.
The purpose of the bond is to provide assurance that the licensee’s business will be conducted in accordance with the PACA and that it will pay any reparation order issued against the firm. If a reparation order involving transactions that occurred during the bonding period are not paid by the licensee, the USDA, on behalf of the unpaid reparation holder will make claim on the bond and have the funds distributed to the unpaid complainant in the reparation complaint.