Peanut Corporation of America reflects dirty politics after the latest show of pleading the 5th when questioned then PCA filed for Chapter 7. Thus far 637 illnesses have been reported through the CDC as the death toll is expected to climb over 10 (9 confirmed) after Peanut Corporation of America had shipped salmonella across the country knowingly. With suits pending and ongoing, the feds stepped in with a committee on tap. At the hearing PCA protected themselves by pleading the 5th which legally umbrellas their answers to null and void. PCA pulls out their slick routine by filing for Chapter 7 instead of Chapter 11 or Chapter 13.
Chapter 7 has been used widely across America with the 2004 stats reflecting that 1,153,865 Americans had filed for Chapter 7, 10,368 filed for Chapter 11 and 454,412 for Chapter 13. It’s 2009 as the reports share added numbers.
Chapter 7 bankruptcy is known as “liquidation” or “straight bankruptcy” because a bankruptcy trustee can liquidate (sell) a filer’s non-exempt assets to cover part of the outstanding owed bills. Most Chapter 7 filers keep their property because they don’t have non-exempt assets. Chapter 7 helps a business that goes belly up, but why didn’t the PCA use Chapter 13 or Chapter 11? Chapter 13 only helps with past due amounts. Chapter 7 wipes the slate clean. Chapter 11 is mainly used by corporate entities with the debtor remaining in control of the business operations as a “debtor in possession”. PCA does not want to remain in business therefore Chapter 7 was foreseen as their choice. Now back to liquidation.
Feds vs. PCA continues. The feds investigation against PCA mixed in with a Chapter 7 may take quite some time back to back. Until then, it’s liquidation time. No items should be sold due to the findings of dead rodents, feathers, mold, water leaks and other unhealthy contributions to the salmonella outbreak, but that remains to be seen since PCA can not be trusted. With the possible shuffle of factory products and other tainted instruments such as belts and boards, America remains on stand-by when it comes to this form of recycling. Back tracking on “sent” tainted instruments to other factories may be protected under law. As for now, PCA is out of business, so what’s next? The automatic stay prevents new filings and stops existing cases pending the outcome of the bankruptcy (or lifting of Automatic stay). The lawsuits against PCA mounds, but must take second fiddle to Chapter 7. You can find most of this information at Chapter7.com, Wikipedia or by local attorney.