Peanut Corp. of America Shutters Plant, Files for Bankruptcy
Chapter 7 proceedings allow a company to liquidate its assets and give proceeds to creditors. PCA also considered Chapter 11 bankruptcy, under which a company attempts to reduce debt and stay in business. However, officials felt future business prospects didn’t look promising.
“It’s regrettable, but it's inevitable with the events of last month,” Andrew S. Goldstein, a bankruptcy lawyer who filed the petition, said in an AP article.
The bankruptcy proceeding may delay the lawsuits filed against PCA because of the salmonella outbreak, but lawyers say they plan to ask a judge to let the cases move forward anyhow.
Meanwhile, lawmakers and the food industry are in agreement that something must be done to improve food safety, according to the Baltimore Sun.
“You’ve had the consumer community, the expert community clamoring for this for over a decade,” Michael R. Taylor, a former deputy commissioner of the Food and Drug Administration, stated. “What’s happened with this outbreak is it has just elevated the intensity of the political focus and the demand or expectation that something be done.”
On Feb. 11, Stewart Parnell, the owner of PCA, refused to answer questions from members of Congress regarding the current salmonella scare. When called to testify, Parnell said, “On the advice of my counsel, I respectfully decline to answer your questions based on the protection afforded me under the United States Constitution,” Reuters reported.
Still, political and health officials are questioning PCA's actions. “Lives were lost and people were sickened because they took a chance, I believe knowingly, with products that were contaminated,” Rep. Greg Walden, R-Ore., was quoted as saying.
FDA officials stated that they have evidence of PCA selling products contaminated with salmonella in 2007 even though internal tests revealed the presence of the bacteria.
Reuters stated that the current salmonella outbreak has possibly killed eight, and has sickened at least 600. The FBI is now working with the FDA to conduct a criminal investigation of the company.
On Feb. 9, PCA closed a processing plant in Plainview, Texas, after a test indicated that salmonella could be present there. The New York Times quoted a statement from the Texas Department of State Health Services saying, “it does not appear that any of the implicated products—peanut meal, granulated peanuts and dry roasted peanuts—have reached consumers.”
The list of recalled peanut products now stands at more than 430, The Atlanta Journal-Constitution writes, and “continutes to expand almost daily.”
After the peanuts, which came from PCA, were rejected in Canada, the FDA refused to let them back into the United States. The Associated Press said an FDA report indicated that the shipment contained a "filthy, putrid or decomposed substance, or is otherwise unfit for food." What ultimately happened to the peanut shipment is uncertain.
Caroline Smith DeWaal, who directs the food safety program at the Center for Science in the Public Interest, said the rejection of this peanut shipment is important because it happened so soon before the main salmonella outbreak. DeWaal said the FDA might have been able to inspect the PCA plant before the problem became widespread.
Meanwhile, the Canadian Food Inspection Agency is recalling several food items that contain peanuts or peanut products for fear that they, too, could have salmonella, according to The Gazette in Montreal.
The Canadian recall is related to the current salmonella problem in the United States. No illnesses have been reported in Canada, however.
In some of the 12 cases reported by the FDA, the company had the product tested again by another lab, with clean results. But the product should have been destroyed after the first test, said Michael Doyle, director of the University of Georgia’s Center for Food Safety, because a retest may not have found the salmonella.
“This kind of lab-shopping is absolutely shocking, and it really shows that the FDA’s program is inadequate to protect American consumers,” said Sarah Klein, who works for the Center for Science in the Public Interest, to KRIS-TV in Corpus Christi, Texas.
But this is far from the first time a company has been accused of knowingly distributing a subpar—or even deadly—product to save money despite consumer dangers. The baby food company Beech-Nut was famously fined for doing so in 1987, and Ford allegedly decided not to fix a deadly design flaw in the Pinto despite knowing the potential consequences to drivers.
The FDA has recommended that Americans “postpone eating” products that contain peanut butter and peanut paste, including ice cream, cookies and candy, due to concerns over a salmonella outbreak. More than 80 companies may have bought contaminated peanut butter made by PCA.
Some newspapers listed more specific information, as provided by the FDA. The San Francisco Chronicle provides a thorough Q&A section on salmonella, the recent outbreak and the specifics of the recall list.
Consumers are warned not to buy or consume a growing list of products containing peanut butter; the full list is available on the FDA Web site.
This is the second salmonella outbreak linked to peanut butter in recent years. In 2007, ConAgra Foods recalled Peter Pan and Great Value brands of peanut butter with a particular product code after more than 400 people reported contracting salmonella. ConAgra, in April 2007, announced that a roof leak and broken sprinkler system at a Georgia plant helped moisture get into the peanut butter and produce salmonella, according to WebMD.
The current outbreak is different in that peanut butter sold directly to consumers is not involved.