Trustee Named for Peanut Corp. Liquidation

February 19, 2009

The liquidation of Peanut Corporation of America, the company linked to a nationwide salmonella outbreak, will be overseen by a Roanoke bankruptcy court trustee, the fresh appointee said in a telephone interview Wednesday.

Roy Creasy said he was appointed by the U.S. Trustee that oversees bankruptcy cases in the Western District of Virginia on Friday.

Peanut Corporation sought bankruptcy protection last week after a salmonella outbreak traced to its Blakely, Georgia plant led to one of the biggest product recalls in U.S. history.

Texas state health officials said last week that they ordered a recall of products from the company’s Plainview, Texas, plant as well.

Creasy said he has been focused on securing the plant facilities, and getting the company’s accounts in line, and is just beginning the process of evaluating claims against the company.

“There are a couple plants we’re securing and we’ll need to see about liquidating,” Creasy said. “I’m finding people that live in that area that can help secure the buildings.”

The Lynchburg, Virginia-based company, which processed peanuts and made peanut butter for bulk distribution, also operated facilities in Suffolk, Virginia.

Creasy said he is working to get the company’s bank accounts and billing in line and will next focus on insurance claims.

“We’re going to have to work out the insurance claims and insurance proceeds for all the people that are injured and what other parties might try to make claims against (the company),” Creasy said. “We’re just starting all that.”

Peanut Corporation filed for Chapter 7 bankruptcy protection, which requires the company to stop operating and essentially turn over the keys to a trustee so that the firm can be liquidated.

The U.S. bankruptcy code also restricts litigation against the bankrupt entity, and Creasy said he would have to work within the confines of the code.

“My job is to marshal the assets, and pursuant to the bankruptcy code, figure out a mechanism (so that people) can perceive what their pro-rata share would be,” Creasy said.

The salmonella outbreak was traced to the Blakely, Georgia plant operated by Peanut Corporation. The outbreak has sickened 642 people in 44 states and may have killed nine people. More than 2,200 products have been recalled since mid-January, either because they were linked to Peanut Corporation or because such links could not be ruled out.

The owner of Peanut Corporation, Stewart Parnell, refused to answer questions before Congress on Wednesday, citing rights under the U.S. Constitution. Inspections showed the company not only had several tests that showed salmonella contamination, but also cockroaches, a leaky roof and filthy equipment, the FDA has said.

The case is In re: Peanut Corporation of America, U.S. Bankruptcy Court, Western District of Virginia, No. 09-60452. (Reporting by Emily Chasan; editing by Richard Chang)


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