Trade associations representing the foodservice industry are praising the introduction of a bill that will help distributors offset uncollectible debt incurred as a direct result of Covid-19 business shutdowns.
The bi-partisan Providing Liquidity for Uncollectible Sales (PLUS) Act was introduced today by Reps. Darin LaHood (R-Ill.) and Jimmy Panetta (D-Calif.). The legislation would provide a tax credit for food and beverage distributors who were unable to collect on debts from food establishments that were forced to shut down this spring. The bill is supported by the United Fresh Produce Association, the International Food Distributors Association (IFDA), and National Fisheries Institute (NFI).
The foodservice distribution industry collectively experienced more than $12 billion in uncollected debts as restaurants and other facilities shutdown in response to the global pandemic and were not able to pay their distributors, all three groups said in a statement Tuesday. Seafood distributors reported approximately $2.2 billion of debt owed to them, fruit and vegetable distributors hold an additional $5 billion in such debt, and broadline foodservice distributors reported more than $5 billion of debt, they said.
“Produce foodservice distributors absorbed a devastating blow with the spring shutdown of the restaurant and hotel industry. The impact of lost inventory and unpaid bills is not recoverable,” Tom Stenzel, President and CEO of United Fresh Produce Association, said in a statement Tuesday. He called the bill “a helpful solution to an insurmountable challenge for produce foodservice distributors and the companies on both ends of their business agreements.”
The PLUS Act also helps address shortcomings in industry assistance from the Coronavirus Aid, Relief, and Economic Security (CARES) Act, enacted in March. The groups say the CARES Act did not account for the biggest challenge they face in getting back on their feet: large, unpaid debts owed to distributors for food that restaurants could not use due to Covid-related shutdown orders.
“Tax credits for this $12.2 billion in outstanding debts will provide the liquidity distributors need to continue to extend credit to their restaurant customers and help them get back on their feet as the economy restarts,” the associations said.
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