Big losses for those doing business with Peanut Corp.

Atlanta businessman Taro Dama had spent about $8,000 on peanut products from Peanut Corp. of America when the salmonella outbreak prompted a massive food recall.

His $8,000 investment became an $8,000 loss.

• For all the latest developments on the peanut crisis and the salmonella outbreak, with an updated list of recalled items, plus background on the scare, go to the AJC's special report: ajc.com/peanuts.

Dama’s Atlanta Nut Co. is one of about 100 businesses in Georgia and 500 nationwide that did business with Peanut Corp., the company at the center of one of the largest food contamination outbreaks in U.S. history.

The many Georgia businesses, which include peanut growers, food producers, candy companies and food stores, were named in documents filed Friday as part of the company’s liquidation bankruptcy.

Peanut Corp.’s bankruptcy proceedings, scheduled to begin Thursday in Virginia, mark the next chapter in an epic episode of food contamination that has sickened 677 people in 45 states and may have contributed to nine deaths.

The outbreak has prompted a massive recall of more than 3,000 products, almost all of which contained ingredients made at the company’s plant in Blakely.

Because the Virginia-based company is closing down, the bankruptcy will focus on identifying company assets, converting them to cash and distributing it.

The process could take a year, said Roy Creasy, the trustee appointed by the U.S. Trustees Office to run the bankruptcy.

Hundreds of creditors could line up. Dama suspects he won’t get a dime.

“Even if I asked, I’m not going to get any,” he said.

Bankruptcy experts said many creditors would be lucky to get a few cents on the dollar of what they’re owed. Those who have first claim, according to the law, include secured creditors, such as those with liens against the company.

Employee wages and pensions also are high on the list. But unsecured creditors, such as Dama, and individual victims are toward the bottom of the list, the experts said.

They could include those sickened in the outbreak, families of those who died from salmonella, companies that provided products and services to Peanut Corp., and food producers who had to recall products because they used Peanut Corp. ingredients in the food. Kellogg, which used Peanut Corp. ingredients in some products, has said the recalls could cost it asmuch as $70 million.

While victims are low on the list of eligible claimants, some of Peanut Corp.’s insurance money may be dedicated to them.

Essentially, the bankruptcy protects Peanut Corp. from creditors and others seeking money that is owed to them, experts said. The company would in general only pay out what is obtained through its insurance and the sale of assets. All lawsuits seeking money must now become part of the bankruptcy.

In the court papers filed Friday, Peanut Corp. listed $11.3 million in assets. It included its $2 million interest in the South Georgia plant and surrounding eight acres. The company also listed a $1 million insurance policy with AIG for recalls.

The company listed $4.7 million in money owed, including debts to banks and government agencies.

The company’s income for the fiscal year ending in September was $19.6 million, the court papers said.

People who believe they were sickened by salmonella from products that included Peanut Corp. ingredients can still seek damages from the manufacturers of those foods, experts said.

Peanut Corp. has been named in about a dozen personal injury lawsuits.

Creasy, the trustee, said that next week’s initial meeting of creditors will focus on identifying the company’s assets and initiating the process of selling them.

In some bankruptcy cases, the company president addresses the creditors at the first meeting, but Creasy said Peanut Corp. president Stewart Parnell may decline to speak, as he did during the recent Congressional hearing on the salmonella outbreak.

The case could become more complicated since an insurance company for Peanut Corp., Hartford Casualty Insurance Co., has filed a lawsuit that questions whether the insurer must cover damages from claims filed by victims in the salmonella outbreak.

As for Dama and his nut business, he said the financial pain is still coming. While he sells a variety of nuts, he said he has hardly sold any peanuts in the last two months. He believes the damage from the salmonella scare could cost him up to $15,000.

“I hope that people just forget about it,” he said.

News researcher Richard Hallman contributed to this report.