No solid answers from peanut exec

Lynchburg, Va. —- At his company’s initial bankruptcy hearing here Thursday, the president of Peanut Corp. of America, the company blamed for a national salmonella outbreak, once again declined to answer most questions from attorneys and court officials. This time he left almost all the talking to his daughter, who has served as the company’s bookkeeper.

Asked simple questions about his company’s history and its business dealings, Stewart Parnell smiled slightly and quietly said, “I don’t know,” or —- nodding toward daughter Grey Adams —- “she knows more than I do.”

When asked by an attorney about whether he knew if and when his company shipped out salmonella-tainted products, Parnell refused to answer, taking his Fifth Amendment right not to give self-incriminating evidence.

Even Adams, though, said she couldn’t answer simple questions —- such as the monthly salary the company paid her mother to be the office manager in Peanut Corp.’s home office headquarters in a building behind the Parnells’ Lynchburg home.

Asked at one point whether the company that had nearly $20 million in sales last year paid any dividends to its shareholders —- namely, Parnell and his partners —- she replied, “What’s a dividend?”

At a congressional hearing in Washington last month, Parnell similarly took the Fifth. That left lawmakers and the world wondering why he apparently may have knowingly shipped salmonella-tainted peanut products from his plants in Blakely and Plainview, Texas, that are blamed for making 683 people sick and may have caused nine deaths.

What is becoming clear is that Peanut Corp. and Parnell will likely be paying relatively little to the victims of the salmonella outbreak, instead leaving its insurance company and its customers to bear most of the monetary costs of the crisis.

Almost all the $11.3 million in assets the company listed in its bankruptcy filing will likely be split between its secured creditors and lenders, such as SunTrust Bank, said bankruptcy court trustee Roy Creasy. Included in the assets is about $4 million for its Blakely plant and its equipment.

The hundreds of salmonella victims who have or are expected to sue the company, meanwhile, will likely split $24 million from an insurance policy that the company had to cover bodily harm and injury claims, according to an attorney involved in the case.

In an odd twist of fate, exactly how much they might get may depend on when they got sick, said Ron Simon, a Houston attorney who represents several victims.

According to Simon, Peanut Corp. renewed its $12 million policy with the Hartford insurance company on Oct. 1 of last year.

Victims who can prove they got sick before Oct. 1 —- fewer than a dozen, he said —- will likely split $12 million from the annual policy. Victims who got sick after Oct. 1 —- almost all the rest of the 683 so far —- will probably end up splitting another $12 million from the current year’s policy, according to Simon.

“It all depends on when you got sick,” he said.

Most of the money in any settlement, though, will probably come from Peanut Corp.’s other victims —- the companies that it supplied.

Bruce Clark, a principal in the Marler Clark law firm that also represents families of people who have died or were sickened by salmonella, said he is trying to reach a settlement with two of the company’s biggest customers, King Nut Cos. and cereal and cracker maker Kellogg Co. Both companies have been named in lawsuits by his firm, Clark said.