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What Does Peanut Corporation of America Bankruptcy Mean to Salmonella Victims?

Posted By Cliff Tuttle | February 15, 2009

Posted by Cliff Tuttle

Peanut Corporation of America, besieged by reports of death and widespread illness due to salmonella contamination in its products and grossly unsanitary conditions in some of its manufacturing plants, filed Chapter 7 Bankruptcy on Friday, February 13. The story is rightfully making headlines around the world.

So, Chapter 7, as most people know, means liquidation. The Peanut Corporation of America is out of business and its property will be marshaled and sold. The secured creditors have first claim on the assets secured by first mortgages and certain types of liens, but that may make little difference. The contaminated, stigmatized plant and machinery are worthless — worse than worthless. No one will ever buy it, not even after it has been cleaned it up at great expense. Chances are, there would be no buyers for the vacant lot, even if the building were carted away. Whatever cash or uncontaminated assets there may be will undoubtedly be used up in bankruptcy administration costs and fees for the debtor’s attorneys.

Does that mean that the families of the nine people who died and many others seriously sickened are unable to obtain compensation through the courts? Probably not. But the outcome in individual cases will depend on many factors.

The type of claim that salmonella victims are likely to bring is called “products liability.” There are several products liability theories that may be applicable, depending upon the specific facts of the case, the law of the state where suit is brought and the target defendant. Without going into detail, all parties in the chain of distribution of a dangerous or defective product may be liable under statutes enacted to protect users of the product. That means that attorneys representing victims of salmonella poisoning from products originating with Peanut Corporation of America will be looking at where the product went after it left the plant and whose brand name is on the package. In some cases, evidence concerning the contamination and injury, as well as the chain of distribution, may be readily available. In others, evidence of some element of the case may be difficult or impossible to obtain.

If you think that you or a member of your family may have been a victim of salmonella poisoning, preserve all of the evidence and find a lawyer who has a background in this field of litigation.



CLIFF TUTTLE has been a Pennsylvania lawyer for over 45 years and (inter alia) is a real estate litigator and legal writer. The posts in this blog are intended to provide general information about legal topics of interest to lawyers and consumers with a Pittsburgh and Western Pennsylvania focus. However, this information does not constitute legal advice and there is no lawyer-client relationship created when you read this blog. You are encouraged to leave comments but be aware that posted comments can be read by others. If you wish to contact me in privacy, please use the Contact Form located immediately below this message. I will reply promptly and in strict confidence.

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