126.47 Milk contractors; security.

1,020 words·~5 min read·/wi/chapter-126/126-47-2

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

(1)Security required.

(a)A milk contractor shall file security with the department, and maintain that security until the department releases it under sub.

(7), if all of the following apply when the department first licenses the milk contractor under s. 126.41

(1):

1. The milk contractor reports more than 150,000 hundredweight of milk under s. 126.41

(bg).

2. The milk contractor files an annual financial statement under s. 126.44

(1)and that financial statement shows negative equity.

(ae)A milk contractor who reports any deferred payment contract obligations under s. 126.41

(ar)or 126.44

(e)1. , other than deferred payment contract obligations to a milk producer or producer agent that has, under s. 126.70

(b), permanently waived eligibility to file a default claim against the milk contractor, shall file security with the department, and maintain that security until the department releases it under sub.

(ae), unless the milk contractor’s annual financial statement under s. 126.44

(1)shows that the milk contractor has positive equity and a debt to equity ratio of not more than 4.0 to 1.0.

(b)A milk contractor shall file security with the department, and shall maintain that security until the department releases it under sub.

(am), if all of the following apply:

1. The milk contractor’s last annual financial statement under s. 126.44

(1)shows negative equity, a current ratio of less than 1.25 to 1.0, or a debt to equity ratio of more than 2.0 to 1.0.

2. The milk contractor’s estimated default exposure exceeds $20,000,000.

(3)Amount of security.

(a)A milk contractor who is required to file or maintain security under sub.

(a)shall at all times maintain security in an amount at least equal to the milk contractor’s estimated default exposure.

(ae)A milk contractor who is required to file or maintain security under sub.

(ae)shall at all times maintain security that is at least equal to the milk contractor’s highest total, at any time during the preceding 12 months, of unpaid obligations for producer milk procured in this state under a deferred payment contract, excluding any unpaid obligation under a deferred payment contract, for milk procured in this state, with a milk producer or producer agent that has, under s. 126.70

(b), permanently waived eligibility to file a default claim against the milk contractor.

(b)A milk contractor who is required to file or maintain security under sub.

(b)shall at all times maintain security at least equal to the milk contractor’s estimated default exposure less $20,000,000.

(c)If more than one of pars.

(a)to

(b)applies to a milk contractor, the milk contractor shall at all times maintain security at least equal to the greatest amount of security that the milk contractor is required to maintain under any one of pars.

(a)to

(b).

(4)Form of security. The department shall review, and determine whether to approve, security filed under this section. The department may approve only the following types of security:

(a)Currency.

(b)A commercial surety bond if all of the following apply:

1. The surety bond is made payable to the department for the benefit of milk producers and producer agents.

2. The surety bond is issued by a person authorized to operate a surety business in this state.

3. The surety bond is issued as a continuous term bond that may be canceled only with the department’s written agreement or upon 90 days’ prior written notice served on the department in person or by certified mail.

4. The surety bond is issued in a form, and subject to any terms and conditions, that the department considers appropriate.

(c)A certificate of deposit or money market certificate, if all of the following apply:

1. The certificate is issued or endorsed to the department for the benefit of milk producers and producer agents.

2. The certificate may not be canceled or redeemed without the department’s written permission.

3. No person may transfer or withdraw funds represented by the certificate without the department’s written permission.

4. The certificate renews automatically without any action by the department.

5. The certificate is issued in a form, and subject to any terms and conditions, that the department considers appropriate.

(d)An irrevocable bank letter of credit if all of the following apply:

1. The letter of credit is payable to the department for the benefit of milk producers or producer agents.

2. The letter of credit is issued on bank letterhead.

3. The letter of credit is issued for an initial period of at least one year.

4. The letter of credit renews automatically unless, at least 90 days before the scheduled renewal date, the issuing bank gives the department written notice, in person or by certified mail, that the letter of credit will not be renewed.

5. The letter of credit is issued in a form, and subject to any terms and conditions, that the department considers appropriate.

(5)Department custody of security. The department shall hold, in its custody, all security filed and maintained under this section. The department shall hold the security for the benefit of milk producers and producer agents.

(5m)Monthly reports. A milk contractor who is required to file or maintain security under this section shall provide a monthly report to the department containing all of the following:

(a)The milk contractor’s total unpaid obligations at the end of the previous month for producer milk procured in this state under a deferred payment contract, excluding any unpaid obligation under a deferred payment contract, for milk procured in this state, with a milk producer or producer agent that has, under s. 126.70

(b), permanently waived eligibility to file a default claim against the milk contractor.

(b)Either of the following:

1. The highest amount of the milk contractor’s unpaid milk payroll obligations at any time during the preceding month.

2. The total amount of milk payroll obligations that the milk contractor incurred during the preceding month.

(6)Additional security.