DEL.ICIO.USUpdated: 6:03 p.m. February 13, 2009
Peanut Corp. of America files for bankruptcy
The Atlanta Journal-Constitution
Friday, February 13, 2009
The company linked to a national salmonella outbreak, Peanut Corp. of America, filed for Chapter 7 bankruptcy Friday in federal court in Lynchburg,Va., court documents show.
The filing comes at the end of a week in which problems have continued to mount for Lynchburg-based Peanut Corp., whose Blakely peanut-processing plant was shut down last month after federal health officials traced the salmonella to the plant.
• See photos
• 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. In its filing, the company said its assets were between $1 million and $10 million, and its liabilities were between $1 million and $10 million.
Andrew Goldstein, the Roanoke, Va., attorney who filed the bankruptcy petition said “it was kind of almost an inevitability because all their business opportunities shut down” in the weeks since the Blakely plant was linked to the salmonella outbreak.
“The snowball just got bigger and bigger, and we had no choice,” Goldstein said.
The salmonella outbreak so far has sickened more than 630 people and may have caused the deaths of nine people. It has led to one of the largest product recalls in the nation’s history, with more than 2,000 products recalled thus far, according to the FDA.
The company could not be reached for comment and did not post any statement regarding the development on its Web site.
Legal experts said the bankruptcy may alter the landscape of lawsuits and liability involving the company, already the subject of damage claims in federal and state courts, but it will not protect them against salmonella litigation.
Frederick Tung, a professor of corporate, securities law and bankruptcy at Emory Law School in Atlanta, said the bankruptcy filing would give Peanut Corp. protection from all creditors — including “tort creditors…who are harmed by having eaten tainted peanut butter.”
Under bankruptcy liquidation, creditors, including those who had filed damage claims against the company, “would not be paid in full for their damages,” said Tung. “Instead they would be paid some fraction of their claims.”
Future lawsuits filed against the company could also be dealt with in the bankruptcy, said Tung.
Where bankruptcy may lessen the burden on Peanut Corp. in having to pay claims of damages to salmonella victims, it may increase the burden on Peanut Corp. customers — the companies that used its peanut butter and paste to make their products.
“The bankruptcy of PCA will slow the process down slightly,” said Seattle food-borne illness attorney Bill Marler, who has filed six claims against Peanut Corp.
“But the victims will be able to be compensated from either PCA’s insurance policy or Kellogg or King Nut,” which made crackers and peanut butter the plaintiffs claim sickened them with salmonella poisoning, Marler said.
Earlier this week, Peanut Corp. was the focus of a congressional subcommittee hearing on the outbreak. Company president Stewart Parnell and Blakely plant manager, Sam Lightsey, declined to testify, invoking their 5th amendment right not to incriminate themselves.
According to documents and testimony presented at the hearing, PCA kept shipping products to unsuspecting customers even after it learned the products were tainted with salmonella, according to e-mails and other documents released by the House Subcommittee on Oversight and Investigations.
On Monday, agents from the FBI spent most of the day at the Blakely plant.
That same day, PCA voluntarily shut down a second peanut plant, in Plainview, Texas, after a private lab told the company it discovered possible salmonella in a sample of products Sunday night.
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Comments
By BOB2
Feb 13, 2009 8:39 PM | Link to this
Don't you people in Georgia arrest Salmonella Bioterrorist Serial Killers who intentionally and willfully target America's schools?
By Tac Mot
Feb 13, 2009 5:54 PM | Link to this
In China, The Presidents of the companies that sold tainted milk products were executed. Something to think about here, since these people knew that they were shipping out peanut products that had salmonella in it and that kids would die.
By Paddy
Feb 13, 2009 5:12 PM | Link to this
It would have been alot cheaper for these goons to shut the plant down for 2 weeks. Give it a spotless cleaning and then get back to work. What narrow minded morons.
By john
Feb 13, 2009 5:10 PM | Link to this
The problem here is the same one that got us into the financial mess we are in. "Greed" The ends justify the means. CEO's, Wall Street, bankers and the rest don't care about anyone or anything other than their profit margins. The CEO and Upper Management who knew about this, should have to serve a prision sentence where all the get to eat is bread, water and their own peanut butter. They can get released once they have eaten all the peanut butter. Lack of leadership on all levels has put the USA in a bad place.
By Rod
Feb 13, 2009 5:08 PM | Link to this
Since they turned the mess loose on us. I want the toughest criminals turned loose on them in jail. People died which is just plain unacceptable.
By Pixel Dust
Feb 13, 2009 4:29 PM | Link to this
I hope some of that stimulus money will go towards hireing more inspectors so we can keep better tabs on all places that feed our citizens. Give the inspectors more people to be able to check on every production facility ever week or two. Drop in visits, not announced. All this recall crap not only kills business for the product that is involved in it but all products even related that are not involved.. year after year of SO many recalls that cause us all not to know what is safe to purchase any more. It's product after product.. from fresh vegitables, to dog foods... to shotty made equipment and vehicles that tear up in no time.. why own a product that you have to replace because it is no good when you bought it.
This man should not be allowed to go bankrupt... he caused so many other companies to go bust and all the families of the workers who sold the products were affected besides all that got sick from it. We can't keep blaming this country not spending money on because we don't have the money to buy... that has a big part to do with it but the WHOLE REASON WE DON"T HAVE MONEY is because SO many companies have SO many recalls on shotty products! Enforce better quality control and arrest the people who try to sell products that could harm us all. If they knew it was possible harmful then they sold it with intent to cause harm!
By Fran
Feb 13, 2009 4:10 PM | Link to this
There had better be homicide indictments and serious jail time for these scum.
By Daniel
Feb 13, 2009 3:52 PM | Link to this
Vince Parham, I could not agree more with your statement. It is time that people pay in spades for their greed, corruption and disregard for others' lives with the worse things this life has to offer!!!
By Stephen Frazier
Feb 13, 2009 3:50 PM | Link to this
FYI, Bankruptcy will not shield the executives from criminal prosecution, in my opinion. As a matter of fact, the board of directors, if it is an independent one, COULD sue the men on the grounds that they violated certain clauses in their contracts, that is, not to INTENTIONALLY commit illegal acts.
Hell, just blame it all on George Bush and move on.
By Vince Parham
Feb 13, 2009 3:34 PM | Link to this
Stewart Parnell should be charged with 9 counts of criminally negligent homicide and 600+ counts of reckless endangerment. Sam Lightsey should be charged as an accessory to each of these crimes. There is absolutely NO EXCUSE for what these people did, and I use the term "people" loosely. The decision they made to ship these products that they knew could have been tainted by a known biological toxin is an absolute disregard for public safety. But no, Mr. Parnell had nothing but money on his mind and Mr. Lightsey the same. I hope that temporary satisfaction of having a little pocket lining was worth it. They just cost 9 people their lives and devastated their families, sickened over 600 people, cost an as yet untold number of people their jobs and hurt the peanut industry as a whole. They should rot in jail and then in Hell for this kind of egregious behavior!
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