A creditor’s claim shall be paid under this chapter only if the claim is based on a transaction with a processor, dealer, broker, or commission merchant who was licensed pursuant to the provisions of Chapter 6 (commencing with Section 55401) or Chapter 7 (commencing with Section 56101) at the time of entering into the contract involved or at the time of delivery of the farm products.

In any case where the director has notified the creditor before delivery of the farm product that the license authorizing the contract has been revoked or suspended, or the creditor has independent knowledge thereof, and the creditor thereafter makes delivery of the farm products to the former or suspended licensee, the claim shall be disallowed.

In addition, the director may disallow any claim, in whole or in part, upon a finding of lack of good faith in entering into the contract, collusion to violate any provision of Chapter 6 (commencing with Section 55401) or Chapter 7 (commencing with Section 56101), or fraud against the products fund.

The provisions of this section shall not be construed to authorize any person subject to this chapter to continue to perform any of the functions of a licensee while the license is revoked or suspended or to release the person whose license has been revoked or suspended from any damages which may accrue to the other party to the contract, or to others, as a result of the legal inability to perform because of the license discipline.