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Peanut Corp. claims top $200 million

Ray Reed, The News and Advance

June 11, 2009

Claims totaling $202 million had been filed Thursday against the Peanut Corporation of America in U.S. Bankruptcy Court in Lynchburg, as next Monday’s deadline for filing claims approached.

Among the claims were eight involving deaths attributed to a nationwide salmonella outbreak that was traced to PCA plants in Blakely, Ga., and Plainview, Texas, according to the Centers for Disease Control.

PCA was headquartered in suburban Lynchburg, on Wiggington Road in Bedford County. Its president, Stewart Parnell, asserted his Fifth Amendment rights and refused to answer questions during appearances this year before Congress and in U.S. Bankruptcy Court in Lynchburg.

The Marler Clark law firm in Seattle, Wash., filed the death claims, each of which seeks $10 million for the victims’ estate or relatives.

Marler Clark also had filed 86 claims of $1 million each for people who said they were sickened by salmonella. Another claim was being filed Thursday, said William Marler, a principal in the firm.

According to court records, PCA held two insurance policies for product liability, for about $12 million each, which could be used to compensate people who filed injury and death claims. However, Hartford Casualty Insurance Co. filed suit to determine whether it must pay claims filed by victims of the salmonella outbreak.

The CDC said a total of 714 illnesses nationwide were caused by the strain of salmonella identified in the PCA plants, and nine of those victims died.

About 65 other claims were on file Thursday, some of them from food companies that used PCA’s peanut paste and similar products to make candy, cookies, crackers or ice cream that were sold under their own brands.

One of those claims was filed by American National Bank and Trust Co. of Danville, which said PCA owed it about $600,000. Only $31,000 of that total was in secured claims, according to court records.

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 during a March 10 bankruptcy proceeding in Lynchburg.

Dori Foods of Richmond said it was owed $50,000.

Companies in other states filed most of the other major claims.

Late Thursday, Fieldbrook Foods Corp. of Dunkirk, N.Y., filed a claim for $1.7 million. Fieldbrook makes ice cream.

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