Sickened consumers who sued the peanut processor blamed for a national salmonella outbreak could have trouble recovering damages from company accounts because assets listed in a bankruptcy filing will likely go to other businesses that bought its products.
Lynchburg-based Peanut Corp. of America filed documents listing nearly $11.4 M in assets and debts of $4.8 M in U.S. Bankruptcy court. However, more than $7 M listed as assets was in insurance that covers the company’s products and will not be used for claims by consumers. Among the uses for that money would be compensating businesses that had bought Peanut Corp. products that were recalled, trustee Roy V. Creasy said.
Hartford Casualty Insurance Co. has asked for a ruling on whether its $12 million personal injury coverage of Peanut Corp. includes salmonella claims. Hartford has argued that Peanut Corp.’s actions may have negated its insurance coverage.
Peanut Corp. filed for Chapter 7 bankruptcy last month amid growing fallout from the outbreak, which was sickened more than 650 people, may have caused nine deaths, and led to one of the largest product recalls in U.S. history.
The Food and Drug Administration has said that more than 2,670 peanut products have been recalled.
Companies file Chapter 7 to liquidate their assets and distribute the proceeds to creditors.
The only real estate that Peanut Corp. listed in the court documents was its plant in Blakely, Ga., identified by the FDA as the source of most of the illnesses. Inspectors there found roaches, mold and a leaking roof.
The plant was valued at $2 million, with a $1 million lien. The company also listed $2 million worth of equipment at the plant.
Salmonella also was found in products from Peanut Corp.’s Plainview, Texas, plant. It and a leased Suffolk, Va., blanching operation were listed as having unknown values.
The company reported about $19.7 million in gross income for the fiscal year that ended last Sept. 30.
The FBI is conducting a criminal investigation of the company, and Peanut Corp.’s statement of financial affairs included a $100,000 payment for corporate criminal legal representation.
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