More than a year after a nationwide salmonella outbreak, victims and surviving relatives have not received any money in insurance policies held by Peanut Corp. of America that a bankruptcy court judge said they should share.
"Despite all that’s transpired, there is no personal injury claimant that’s received a penny yet,” John Byrnes, an assistant U.S. trustee who is helping oversee PCA’s liquidation, told Bankruptcy Judge William Anderson in Lynchburg this week.
The Lynchburg area-based company faces about 150 claims related to the salmonella outbreak, which cleared store shelves of peanut-based products from peanut butter to candy Easter eggs in early 2009 and is blamed in nine deaths. The company filed for bankruptcy Feb. 13 last year. In early October, the bankruptcy court approved letting salmonella victims or their surviving relatives share $12 million from PCA’s insurance policies.
Byrnes said in a hearing Thursday that the process was designed to quickly divide the $12 million and is being delayed unnecessarily.
Richard Maxwell, a Roanoke lawyer representing the U.S. trustee for the case, gave Anderson an update on the process of dividing that fund. An attorney in Georgia was hired to evaluate the claims of people who said they or their relatives had salmonella poisoning, he said.
The Georgia attorney has been going through the claims and asking for further documentation where needed. He also is talking with the manufacturers who used PCA’s products to see how much they would pay, making up where the $12 million fund will fall short, Maxwell said.
Brynes said the manufacturers should not be involved in the process of dividing the $12 million. Since the manufacturers do have liability for using tainted products, people can sue them in state court after receiving a partial settlement from the insurance money.
“If other people don’t want to give up their claims against the manufacturers, who cares? Because they’re not in bankruptcy,” Byrnes said. Currently, “any individual can hold up the process for everybody.”
Maxwell explained in an interview Friday that coordinating the settlements with the manufacturers ensures that the manufacturers will not try to get money from the $12 million. Also, it saves time for the people seeking money because they won’t have to file separate suits later.
“I’ve heard that relative to other food-borne illness cases, this is moving fairly quickly,” Maxwell said.
He said that in the past year, the lenders took ownership of PCA’s factories. PCA’s home office, at the Wiggington Road home of PCA president Stewart Parnell, has not been touched to settle corporate debts because it is owned by Parnell, not the company. If the company helped pay for the office, then it could be used to pay debts, but “the trustee hasn’t decided whether it’s worth it to go after that,” Maxwell said.
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