Peanut Corporation of America has filed for Chapter 7 bankruptcy in U.S. Bankruptcy Court in Virginia following the recall of peanut products produced in the company’s Blakely, Georgia, and Plainview, Texas, facilities.
“It’s regrettable, but it’s inevitable with the events of last month,” Andrew S. Goldstein, the bankruptcy attorney who filed the petition, told the Associated Press.
Investigators have traced the national salmonella outbreak to peanuts produced by the Peanut Corp. in its Blakely, Georgia, factory. They estimate that the contaminated peanut butter has sickened 630 people and caused the deaths of 9.
According to the AP, the board “had considered a Chapter 11 bankruptcy, but decided on outright liquidation” instead. The recall has financially devastated the company.
The recall of Peanut Corp.’s peanuts led to further recalls of more than 2,000 other products that incorporated the possibly contaminated peanut butter from the Peanut Corp. Recalls of all the affected products amounted to one of the largest collective recalls in American history.
More than a dozen people affected by the contaminated peanut butter have filed civil lawsuits. Food safety attorneys remained optimistic that victims and their families would still be compensated despite the bankruptcy filing. The lawyers attached to the lawsuits will request they be allowed to proceed anyway.
The Peanut Corp. started in 1977 when the Parnell family turned a peanut roasting business into a $30 million peanut processing operation. The Parnells sold the company in 1995. In 2000, Steve Parnell began building another peanut processing company when he bought plants in Texas, Georgia, and Virginia.
The Blakely, Georgia, plant stopped operations when investigators from the Food and Drug Administration found that the Peanut Corp. sold and shipped peanut butter that tested positive for salmonella. The findings prompted an investigation of the Plainview, Texas, plant, where officials found similar problems.
Texas health officials on Friday ordered that all peanut products ever made at the Plainview facility be recalled after finding serious health risks in the plant. According to the AP report, “officials said they discovered rodents, feces and feathers in a crawl space above a production area. An air handling system sucked debris from the crawl space into an area where peanuts are processed.”