Despite hearing, questions about Peanut Corp. remain

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Peanut Corp. of America’s accounting manager gave the company’s first public response Thursday to questions relating to the nationwide salmonella outbreak that forced the company into bankruptcy.

PCA’s president, Stewart Parnell, once again asserted his constitutional right to refuse to answer questions about company operations during a creditors’ hearing in U.S. Bankruptcy Court in Lynchburg, his hometown.

Parnell also cited the Fifth Amendment when he was called to testify before Congress on Feb. 11. PCA filed for Chapter 7 bankruptcy liquidation two days later.

An attorney at the hearing said he picked up useful information from questioning PCA’s accounting manager, Grey Adams, who is Parnell’s daughter.

Ron Simon, a Houston lawyer representing 55 victims of salmonella poisoning, asked Adams about an expenditure for fixing the roof of the company’s plant in Blakely, Ga.

That expenditure occurred a month before cases of salmonella poisoning started to appear in September 2008, Simon said after the hearing.

With birds roosting on the plant’s roof and rainwater leaking into the plant, he said, “it’s not a far stretch” to assume the source of the poisoning was bird droppings washed in through the leaks.

The PCA situation is similar to a salmonella outbreak a year earlier from a ConAgra plant in Sylvester, Ga., where the company said a roof leak was part of the problem in an outbreak affecting Peter Pan peanut butter, said Simon, who said he specializes in salmonella cases.

More than 400 people nationwide became ill in that outbreak.

Adams, who said she handled the books for PCA’s multi-state operation from her father’s suburban Lynchburg office, described PCA’s assets to bankruptcy trustee Roy Creasy and half a dozen lawyers who represented creditors or illness victims.

Many more questions remained, however, after the hearing.

“We got what we expected, which was nothing,” said Bruce Clark, a Seattle lawyer who represented about 75 cases in which people contend they were sickened by salmonella.

Adams sat beside Parnell during Thursday’s hearing, which lasted about two hours. She said she had neither job title nor salary from the company.

When Creasy asked Adams how much peanut product the company had shipped out this year “prior to being tainted,” she replied: “To my knowledge, none of it was tainted.”

Creasy, of Roanoke, said afterward he will continue to work on determining the ownership details and value of the company’s assets in manufacturing plants in Blakely, Ga., and Plainview, Texas. The company also owned a peanut blanching plant in Suffolk.

Federal and state authorities have traced the same strain of salmonella to both the Blakely and Plainview plants.

The company’s estimated $4 million to $6 million in buildings and equipment assure its secured creditors, primarily banks, of some compensation, Creasy said.

Unsecured creditors, almost 100 pages of them in the company’s debt schedule, stand to receive little from the case’s proceeds, several lawyers said.

The company’s plant in Georgia was listed in court filings at a value of $2.05 million, with equipment worth $2 million.

The company listed the value of insurance policies as part of its assets, but details of those were unclear at the hearing.

Adams’ description of the company’s assets included its corporate headquarters on Wiggington Road just outside Lynchburg, the three plants, and several vehicles. One of those was a 2007 Mooney single-engine airplane.

The company held two insurance policies for product liability, for about $12 million each. Those could be used to compensate people who filed injury and death claims, but Hartford Casualty Insurance Co., also has filed suit to determine whether it must pay claims filed by victims of the salmonella outbreak.

Sorting out the value of buildings, equipment, and debts will take time, Creasy said, and he refused to speculate on how long. Bankruptcy cases with liability lawsuits often continue for several years.

If other hearings were to be required, they would be held in Lynchburg, he said.

About 650 people have been sickened in the salmonella outbreak linked to PCA, according to the Centers for Disease Control.

The salmonella may also be linked to at least eight deaths.