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The company responsible for the nation's salmonella outbreak that has sickened some 600 people and may have led to the deaths of eight others today declared bankruptcy. The move comes after the bacterial infection traced to Peanut Corporation of America's (PCA) Blakely, Ga., plant led to one of the biggest product recalls in U.S. history; some 1,800 products have been stripped from store shelves since last month, because they contained or may have contained contaminated peanut butter or peanut paste.

PCA filed a Chapter 7 bankruptcy petition in the U.S. Bankruptcy Court for the Western District of Virginia, claiming that the mass recall had an "extremely devastating" impact on its finances, according to Reuters. Under Chapter 7 companies liquidate their assets to repay creditors rather than reorganize.

The action drew jeers from consumer advocates, who charged that it threatens to let the company off the hook, even though the Food and Drug Administration (FDA) says it knowingly shipped tainted products. Consumers Union (CU), which publishes the mag Consumer Reports, says the entire episode illustrates the need for Congress to overhaul the FDA, beef up funding and empower the agency to impose stiff penalties and take other steps to ensure the country's food supply is safe.

“It is unacceptable for corporations to put consumers' health at risk, and then simply declare bankruptcy and go out of business when they get caught,” Jean Halloran, director of CU's Food Policy Initiatives, said in a statement. “PCA’s declaration of bankruptcy will, among other things, shield it from liability suits filed by consumers who became sick or whose loved ones died as a result of eating PCA's peanut products."

PCA filed for bankruptcy protection just days after its president Stewart Parnell refused to testify at a House hearing about the outbreak. During the hearing, Rep. Henry Waxman, D-Calif., released e-mails in which Parnell grumbled about losing money during the salmonella recall and indicated that he knew his products were contaminated but sent them out anyway.

“The FDA must be given the power and budget it needs to prevent companies from operating the way PCA did," Halloran said. "Congress should require the FDA to visit every food processor at least once a year and it should require all such facilities to register with the FDA and pay a registration fee that will offset the cost of increased inspections.” 

PCA makes peanut butter and peanut paste (used in baked goods) in bulk for institutions and private label companies.

The FBI and FDA are conducting a criminal investigation of the company.

See our in-depth report on the salmonella outbreak for all of our coverage.

photo of peanut butter by PiccoloNamek via Wikimedia

5 Comments

1. 1. pgtruspace 02:11 AM 2/14/09

   There seems to be a major dereliction of duty by regulators. Not only peanut company execs but the regulators that we pay to look after our food supply safety should be jailed for their blind eye on this long time problem. There are plenty of laws on food safety but bureaucrats need to be personally held accountable for their actions or inactions like real people.

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2. 2. candide 08:20 AM 2/14/09

   This is another example of extremely poor decision making by a chief executive. They shipped tainted product rather than shipping delayed product or "losing customers."
   
   Now they are going out of business - and the CEO should be going to jail.
   
   It is obvious that the educational and cultural systems that produce people with values like this are in serious need of a complete overhaul.

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3. 3. KJeroH 12:11 PM 2/14/09

   Part of the problem is that in Western societies when costs are to be cut the first thing to go are personnel, followed by safety and maintenance - the most labor-intensive sections. Government is no different so agencies like the FDA do not have anywhere need the inspectors to properly monitor companies.
   
   It's rather interesting: these situations happen over and over again, yet laws and regulations are constructed under the assumption that the corporations are all trustworthy and consumers are all liars and thieves. For instance, once a company is given permission to go into your account for payments, the consumer cannot stop it from happening without a letter of agreement from the company. Yet, we have this, the current crisis, Enron and any dozens of others -- and "Let the buyer beware!" Just had to throw that in.

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4. 4. Duncan 11:53 AM 2/15/09

   It is tragic for our country that the morals of so many of the elite are such that they can treat others with a callousness that denies their value as fellow human beings. We have seen many examples of executive level decisions made without regard for anything other than corporate profit or personal gain. Given the sporadic nature of these egregious behaviors or the complexity of their economic structures it is doubtful that any episodic monitoring by government agencies could discover them in a timely manner. Continuous and reliable monitoring is a necessary expense for our society to protect our people from the impact of unbridled greed. The expense should be born by corporations since they are responsible for the problem in the first place. As well, corporate executives and board members should be held personally accountable . No bankruptcy actions should protect them from personal liability for their behavior. Additionally personal and corporate liability insurance should be voided in situations where malicious behavior is discovered. They need an imposed conscience by employing significant consequences.

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5. 5. clcoyle 02:35 AM 7/26/10

   
   Filing bankruptcy can be a scary outlook. How to start and who will help? What type of bankruptcy cases or filling is available? What will be the consequences of a bankruptcy filing? You only get one shot, so its vital that you get it right the first time. This is why hiring the right bankruptcy attorney is crucial. Filling for bankruptcy is not easy, as you required proper information and guidance. You can get guidance from any Bankruptcy Lawyers
   CKECK THIS LINK http://www.bankruptcylawyers.com/

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