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Peanut Corporation of America Files for Bankruptcy

Recalls push scandalized company into Chapter 7

By Lisa Wade McCormick
ConsumerAffairs.com

February 14, 2009

• Complete List of Recalled Products --- • Texas Fines Peanut Plant $14.6 Million For Violations • Lawmakers Chastise Food Executives Over Salmonella Outbreak • Source of Salmonella Contamination in Peanut Butter May Be Found • More Pet Foods Added to Salmonella Recall • Peanut Recall Expanded To "All Ingredients" • Peanut Corporation of America Files for Bankruptcy • PCA Shuts Second Peanut Plant In Salmonella Scare • Peanut Butter Recall Claims Still More Products • Ice Cream, Cookies, Donuts Join the Massive Peanut Butter Recall List • Peanut Recall Expands as Feds Release Findings • Congresswoman Demands Peanut Probe • Feds: Peanut Corporation Knew of Salmonella Problem • Dozens More Peanut Butter Products Recalled • NutriSystem Joins Peanut Butter Recall • Peanut Butter Dog Treats Recalled Due to Salmonella • Peanut Butter Health Bars Recalled • Peanut Butter Recall List Grows • Peanut Butter Recall Spreads To More Products • Kellogg Puts Peanut Butter Crackers "On Hold" Due to Salmonella Concerns • Peanut Butter Recalled Due to Possible Salmonella Contamination • King Nut Issues Peanut Butter Recall • Consumer Complaints about Peanut Butter --- Earlier stories • Judge Nixes Peanut Butter Class Action • FDA Failed to Follow Up on 2004 Peanut Butter Contamination • Peter Pan Returning To Store Shelves • Consumers Still Getting Sick From Tainted Peanut Butter • Fourth Peanut Butter Death Reported • Peanut Butter Recall Extended to Products Made as Early as 2004 • Peanut Butter Scare Stirs Congress • Consumers Left Holding the Peanut Butter Jar • Earlier Peanut Butter Contamination Kept Quiet • Peanut Butter Developed as a Health Food • Third Death Blamed on Peanut Butter • Peanut Butter Recalls Spread to Ice Cream & Desserts • FDA Says Peanut Butter Salmonella Outbreak Is "Ongoing" • Salmonella Confirmed in Peanut Butter • Second Death Linked To Tainted Peanut Butter • Death Linked To Tainted Peanut Butter • ConAgra Recalls Tainted Peanut Butter as Complaints Mount • FDA Widens Peanut Butter Warning • Reports of Peanut Butter-Borne Illness Increase • FDA Warns of Salmonella in Peanut Butter --- • Consumer Complaints about Peanut Butter --- • Salmonella: What It Is • More about Food Safety ...

There's more bad news for the peanut processing company linked to the nationwide salmonella outbreak, which has sickened more than 600 people nationwide and may have caused the deaths of nine others.

Peanut Corporation of America (PCA) on Friday filed for Chapter 7 bankruptcy in Virginia, according to the Associated Press.

The action comes just days after PCA's president, Stewart Parnell, refused to answer questions from members of the House Energy and Commerce investigations subcommittee.

That subcommittee is looking for ways to prevent another outbreak like this one, which has forced food manufacturers to recall more 2,000 products that contain peanut butter or paste made at PCA's Blakely, Georgia, plant.

The bankruptcy action also comes on the heels of Thursday's order by the Texas Department of State Health Services to recall all products PCA ever shipped from its plant in Plainview, Texas.

During a recent inspection of that plant, inspectors discovered dead rodents, bird feathers, and rodent excrement in a crawl space above the production area. Plainview is the second PCA plant where inspectors have found unsanitary conditions.

In January, inspectors with the Food and Drug Administration (FDA) discovered roaches, mold, and a leaking roof at the company's Georgia plant.

Inspectors also uncovered documents that revealed PCA shipped peanut products that had tested positive for salmonella, including the strain linked to the current outbreak: Salmonella Typhimurium.

That discovery also exposed a dirty secret in the food manufacturing industry: companies are not required to disclose internal tests to the FDA or state officials.

PCA is now the focus of a criminal investigation for allegedly shipping tainted products. It also faces more than a dozen civil lawsuits.

Damaging evidence has already surfaced in the investigation, including e-mails that indicate Parnell ordered products he knew were tainted with salmonella to be shipped anyway.

Some of those potentially-tainted products made their way to poor school children of victims of recent disasters.

Legal experts say companies file for Chapter 7 bankruptcy protection to liquidate their assets and distribute the proceeds to creditors.

PCA's bankruptcy filing reveals the company's debt and assets both ranged between $1 million and $10 million, according to the Associated Press. The filing also states the recalls have been "extremely devastating" to PCA's financial condition.

Lawyers handling some of the recent litigation against PCA told the Associated Press they are optimistic that victims and their families can still be compensated.

While the bankruptcy proceeding could postpone litigation against the company, the lawyers said they will push a judge to allow the civil actions to proceed.

Many lawyers have also filed lawsuits against King Nut Co. and Kellogg Co., which used PCA-tainted ingredients in their products.

"Even if Peanut Corp. doesn't have enough insurance and enough assets to cover the damages, King Nut and Kellogg will have to step up," attorney Bill Marler told the Associated Press. He has filed seven lawsuits against PCA on behalf of more than 40 possible victims.

None of PCA's products were sold directly to consumers. They were distributed to long-term care facilities, universities, food service industries, and private label food companies in the United States, Canada, Haiti, Korea, and Trinidad.

U.S. food makers, however, used the company's peanut butter and paste to make various products, including cookies, crackers, ice cream, energy bars, and dog treats. That's why so many food manufacturers have recently recalled their products.

And the list of products pulled off store shelves continues to grow almost daily, making it one of the country's largest food-related recalls.

The massive recall, however, does not include any of the major brands of peanut butter sold on grocery stores shelves. That's a message the makers of Jif, Skippy, and Peanut Pan peanut butters have taken great pains to broadcast to consumers. Some have taken out ads in newspapers nationwide to reassure buyers their products are safe to eat.

The FDA now has a complete list of all products recalled in the salmonella outbreak on its Web site. Consumers can check that Web site daily to see if their favorite products are included in any recalls.

Salmonella is an organism that can cause serious and sometimes fatal infections in young children, frail or elderly people, and those with weakened immune systems. Symptoms include fever, diarrhea (which may be bloody), nausea, vomiting, and abdominal pain. In rare cases, it can cause more severe illnesses, including arterial infections (i.e., infected aneurysms), endocarditis, and arthritis.

Health officials say salmonella can also be transferred to humans who handle pet treats tainted with the organism. They advise pet owners to wash their hands after they come touch these pet treats.

Symptoms of salmonella infection in pets include lethargy, diarrhea, bloody diarrhea, fever, and vomiting. Some pets, however, may have a decreased appetite, fever and abdominal pain.

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