Peanut Company Blamed for Salmonella Outbreak Files for Bankruptcy

Peanut Corporation of America, the Virginia-based peanut processor blamed for shipping peanut butter and other products contaminated with deadly salmonella, has filed for bankruptcy, officials said.

The Chapter 7 Bankruptcy means that the company’s assets will be liquidated with the income generated distributed to pay creditors. In such cases, a trustee is automatically appointed to oversee the sell off, as opposed to a Chapter 11 filing, which gives a company time to reorganize its assets in an effort to reduce its debts while staying in business.

The attorney who filed the petition said the salmonella outbreak linked to the company has been “extremely devastating” to its financial condition.

The company, based in Lynchburg, listed its debts and assets as ranging between $1 million and $10 million. This week, the company’s owner, Stuart Parnell, refused to testify before a Congressional committee investigating his company’s handling of the outbreak, which has been linked to nine deaths, 600 sicknesses, and one of the largest food recalls in U.S. history.

The company’s peanut-processing facility in Blakely, Ga. is accused of shipping contaminated peanuts, peanut butter, and other products to food makers across the country. Nearly 2,000 consumer products have been recalled amid the outbreak.

Inspections of the plant and another company facility in Texas turned up dead rodents, leaky roofs, mold, and other contamination. Federal authorities said they have launched a criminal investigation into the company.

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