If a licensee defaults on any of the required security provisions, the licensee is deemed to be insolvent for purposes of this chapter. The claim for relief for damages and the amount recovered in any action for the conversion of milk or milk products, purchased by the licensee while the license is in effect, and the assets of the licensee not subjected to any claim in federal bankruptcy court by a secured or general creditor within four months of the appointment of the department as trustee under this chapter, constitute a trust fund in the hands of the department for all persons having a claim for relief against the licensee on the required security.
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