Peanut Corporation of America subsidiaries file for bankruptcy

Source of Article:  http://www.newsadvance.com/lna/news/local/article/peanut_corporation_of_america_subsidiaries_file_for_bankruptcy/16368/

By Bryan Gentry

Published: May 29, 2009

Two subsidiaries of Peanut Corporation of America filed for bankruptcy this month as part of the parent company’s Chapter 7 proceedings.

Meanwhile, traces of the company’s peanut products still are turning up in the marketplace. Some companies have issued recalls this month, more than four months since the first PCA product recall.

PCA, based in a residential neighborhood on Wiggington Road in Bedford County, filed for Chapter 7 bankruptcy in February while embroiled in a nationwide salmonella outbreak. Salmonella was found in some of PCA’s products and factories, and lawsuits were stacking up against the company.

PCA president Stewart Parnell appeared before a congressional panel discussing food safety in February but refused to answer questions.

On May 22, PCA subsidiaries Plainview Peanut Co. and Tidewater Blanching Co. filed for Chapter 7 bankruptcy. This type of bankruptcy sells all the assets of a business in order to pay debts and settle lawsuits.

Roy Creasy, the court trustee who is managing PCA’s liquidation, prescribed the bankruptcy filings for the subsidiaries, said Mitch Garbee, a Lynchburg lawyer with Wilson, Garbee & Rosenberger. He filed Tidewater Blanching Co.‘s bankruptcy.

Creasy, “as trustee, took control of all assets of PCA, this company being one of those assets,“ Garbee said. “He ... determined that it was necessary to file a Chapter 7 for this subsidiary.“

David Cox, of Cox Law Group in Lynchburg, said declaring bankruptcy for each subsidiary is a part of the parent company’s liquidation process. He handled the paperwork for Plainview Peanut Co.‘s bankruptcy.

Tidewater Blanching Co.‘s bankruptcy papers said the company has fewer than 50 creditors, between $100,000 and $500,000 in assets and $50,001 and $100,000 in debts.

It operated PCA’s blanching operation in Suffolk, which was the company’s only plant in Virginia. Salmonella was not found in the Suffolk plant.

The bankruptcy filing for Plainview Peanut Co. indicates it has fewer than 50 creditors and $50,000 or less of debts and assets.

Plainview Peanut Co. operated PCA’s plant in Plainview, Texas. This plant operated with no inspections for years and salmonella was found in it after the company already was linked to the outbreak.

Founded in Lynchburg in the 1970s, PCA provided peanut butter and peanut paste that proved to be connected to much of the U.S. food chain. Nearly 490 food products - including cookies, crackers, ice cream and brownies - that use ingredients made by PCA have been recalled.

The most recent recall was issued on May 12, just over four months from the first recall, by a dairy in Lynden, Wash.

The salmonella outbreak that began in 2008 eventually sickened more than 714 people, with the most recent illnesses beginning in late March, according to the Centers for Disease Control.

Gentry is a staff writer for The News & Advance in Lynchburg

 

 

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