Section 824IAC2-15-1. Procedure for failures or grain shortages

   (a) If there is a shortage or a licensee fails to comply with the provisions of IC 26-3-7-31, or the director fears the depositors may suffer irreparable harm or a further loss of grain, or the director has evidence that the licensee is insolvent or is unable to satisfy the claims of depositors or producers who have sold grain to the licensee, the director may petition the circuit court of the Indiana county where the licensee's principal Indiana place of business is located for an order authorizing the director by or through his designated representative, auditors, or other agents or employees to seize and take possession of all or a portion of any and all grain located in the licensed facilities and of all pertinent records and property. No petition shall be sought if the licensee agrees to allow the agency to take possession of the licensee's failing business for the purpose of settling the outstanding amounts to the grain depositors.

  (b) Upon taking possession, the director shall do the following:

(1) Give written notice of the action to the surety on the bond or, in the event of a letter of credit, the bank that issued the letter of credit.

(2) Notify the depositors who are owed grain and or proceeds from the sale of grain.

(3) Conduct an audit or other investigation with respect to the grain and proceeds from the sale of grain in which there is an apparent shortage to determine the amount of the shortage and compute the amount due to each depositor as shown by the licensee's records, if practicable.

(4) Notify the licensee and surety or bank of the approximate amount of the shortages.

(5) Notify each affected grain depositor by sending notice to the depositor's last known address as shown by the licensee's records of the balance due the depositor from the licensee's records.

(6) Take title to all grain stored in the licensed facilities in trust for all valid claimants and:

(A) make redelivery of the grain on a pro rata basis to all valid owners of grain bank grain or stored grain; or

(B) sell the grain using a broker hired by the director through a bidding procedure, auction, or any other means that, in the director's judgment, would be best for the grain depositors who either owned the grain or have sold grain and have not received payment:

(i) award a contract to highest bidder with the director reserving the right to reject any or all bids submitted pursuant to an offering and reoffer the grain for sale until the director is satisfied that an adequate price has been tendered; and

(ii) deposit money from the sale of grain in an interest bearing trust account for the benefit of the valid claimants.

(7) Supervise the load out and delivery of grain. All liquidation expenses shall be paid from the proceeds of the sale of the grain remaining in the licensee's bins.

(8) Publish notice to potential claimants in newspapers published in the area served by the licensee. The notice shall contain the following:

(A) Name and address location of the licensee.

(B) A statement that the firm is no longer licensed.

(C) Date, time, and place of the violation and claim hearings.

(D) Purpose of the hearings.

(E) Any other pertinent information.

(9) Review the records, to determine the validity of the claims for storage customers or for unpaid transactions of the sale of grain to the licensee.

(10) Hold a claims hearing for potential claimants to provide evidence of their claims.

(11) Issue a final order with notice to all claimants of record, the surety or letter of credit issuer, and the licensee.

(12) If required, request all or part of the bond or letter of credit be paid to the director.

(13) After the appropriate time has passed for administrative review, and the agency has not received any petitions for review, the agency shall distribute to valid claimants in the following order the:

(A) Proceeds from the sale of grain and any earned interest.

(B) If the proceeds from the sale of grain do not pay the claimants in full, then the security on deposit shall be used in the following order:

(i) The cash deposit.

(ii) Letter of credit.

(iii) Surety bond.

(14) No claims of the licensee shall be honored until the claims of all other valid claimants have been paid in full.

(15) When the license is revoked or the licensee fails, only claims for delivered grain shall be considered. Forward contracts shall not be considered a valid claim for compensation under the bond.

(16) Once a person has failed as a licensee, that person is not eligible for another license to store or buy grain from producers in Indiana.

(17) Interest earned shall be considered as proceeds and shall not be distributed as interest.

  (c) The director shall retain possession obtained under this rule until the claims of all depositors have been satisfied by the proceeds of the sale of grain in the licensee's bins or the proceeds of a bond or until such time as the director is ordered by the court to surrender possession. The director may petition the court to be relieved of and discharged from the operation of the licensee's licensed facilities and may seek to be discharged and released from the liabilities and claims that have arisen or could arise from the operation of that licensee's warehouse or grain buying activities.

  (d) All necessary expenses incurred by the agency or any receiver appointed under this rule or the Act in carrying out the provisions of this rule may be recovered from the licensee in separate civil action brought by the director in the said circuit court or recovered at the same time and as a part of the seizure or receivership action filed under this rule. Part of the expenses may include:

(1) The actual costs for each day or part thereof for each agency employee, designated representative, auditor, receiver, and others involved in the seizing and handling of the grain, records, or property at the licensee's facilities.

(2) The cost of adequate liability insurance necessary to protect the director, the director's designated representative, auditors, receiver, and others engaged in carrying out the provisions of this rule.

  (e) In terminating arrangements for the storing of grain, the warehouse or buyer-warehouse licensee shall prepare and send to all depositors a notice in a form approved by the director or the director's designated representative. The notice shall at least contain the following:

(1) Fact of termination or license expiration of license.

(2) Provision for time frame of deliveries, which shall take place no later than fifteen (15) days from the termination or expiration date of the license.

(3) Balance due to the depositor.

(4) Agency's name, address, and telephone and fax numbers.

  (f) In the event that the depositors are not paid in full for their claims, the director shall forward to the Indiana grain indemnity fund board of directors a list of those depositors who are still owed money and the balance of their claim still due them along with a copy of the final order. (Indiana Grain Buyers and Warehouse Licensing Agency; 824 IAC 2-15-1; filed Jan 19, 2001, 3:04 p.m.: 24 IR 1667; readopted filed Nov 16, 2007, 2:00 p.m.: 20071212-IR-824070667RFA; readopted filed Nov 27, 2013, 1:30 p.m.: 20131225-IR-824130492RFA; filed Nov 16, 2016, 3:34 p.m.: 20161214-IR-824150331FRA)