Peanut Product Recall Update: PCA Files for Bankruptcy

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Peanut Product Recall Update: PCA Files for Bankruptcy

The Peanut Corp. of America last week filed for Chapter 7 bankruptcy in U.S. Bankruptcy Court in Virginia, in the latest development in a saga that began when a foodborne outbreak of salmonella traced to one of the Lynchburg, Va.-based company's containers of peanut butter, triggering an avalanche of product recalls, a criminal investigation by the government, over a dozen lawsuits and much retailer and consumer unease.

The outbreak, which has been linked so far to over 630 cases of illness and nine deaths, originated at PCA's facility in Blakely, Ga., where inspectors discovered substandard conditions. A second plant in Plainview, Texas, closed indefinitely last week after preliminary tests came back positive for possible salmonella contamination.

PCA decided on a Chapter 7 filing to liquidate its assets outright, rather than a Chapter 11 filing, which would have allowed it a period of time to lower its debts and stay in business, because, as the company noted in a court filing, the recalls had taken an "extremely devastating" toll on its finances.

Also last week, on the advice of his attorneys, PCA president Stewart Parnell declined to answer questions before the House Energy and Commerce investigations subcommittee, which is looking to stave off another outbreak. According to e-mails, however, he knowingly ordered contaminated items to be shipped.

Among the companies affected by the latest round of recalls connected to the outbreak are Abbott Nutrition (ZonePerfect nutrition bars) and the Scotts Co., LLC (wild bird food suet products).

Meanwhile, a study by Burson-Marsteller and Penn Schoen & Berland found that more than nine in 10 U.S. consumers, or 93 percent, have recently read or heard reports of food safety issues and recalls, and almost a fourth of Americans said the recalls would affect their long-term food-buying practices.

All isn't totally negative as far as consumer perceptions go, however: The study further found that although two-thirds, or 68 percent, of Americans believe that instances of food contamination have risen in the past five years, 87 percent still somewhat or strongly agree that the United States has one of the strongest food safety systems in the world.