Peanut Corp. to Liquidate Following Salmonella Death (Update1)

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By Dawn McCarty and Margaret Cronin Fisk

Feb. 13 (Bloomberg) -- Peanut Corp. of America, the closely held company facing a criminal investigation over hundreds of salmonella poisonings, sought to liquidate in bankruptcy.

The company listed debt and assets of less than $10 million in Chapter 7 documents filed today in U.S. Bankruptcy Court in Lynchburg, Virginia. Peanut Corp. was sued last month by the family of a Minnesota woman over claims she died of salmonella poisoning after eating contaminated peanut butter.

Shirley Mae Almer, 72, died Dec. 21 after consuming peanut butter at a nursing home that contained the same genetic strain of salmonella that has sickened more than 500 people in 43 states, lawyer Fred Pritzker said Jan. 27 in a statement. Almer’s family blamed creamy peanut butter produced by Peanut Corp. and sold under the King Nut brand name.

Peanut Corp., based in Lynchburg, announced recalls of peanut butter products on Jan. 13 and Jan. 18, saying they might be contaminated. The lawsuit, filed in state court in Minneapolis, alleged that Peanut Corp. and King Nut Co. failed to properly supervise production workers or maintain sanitary conditions.

Almer’s death was the “canary in the coal mine” that led health investigators to the source of the salmonella outbreak, Pritzker said.

The bankruptcy case is In Re Peanut Corp. of America, 09- 60452, U.S. Bankruptcy Court for the Western District of Virginia (Lynchburg).

Last Updated: February 13, 2009 15:24 EST



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