Saturday, February 14, 2009
Peanut Corp. of America Files for Bankruptcy
Law.com reports that the peanut processing company at the heart of a national salmonella outbreak has announced it is going out of business. Can't say that I am surprised! The company had considered a Chapter 11 bankruptcy but decided on an outright liquidation under Chapter 7. Companies file Chapter 7 to liquidate their assets and distribute the proceeds to creditors, as opposed to a Chapter 11 filing that gives a company breathing room while it tries to reduce its debts and continue in business. Since more than a dozen civil lawsuits have been filed against the company, if Peanut Corp. doesn't have enough insurance and enough assets to cover the damages, the other defendants King Nut and Kellogg may have to pay up. The Law.com story is avalable here.