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China court declares tainted milk dairy company bankrupt

By Bernard Hibbitts (editor) and University of Pittsburgh School of Law students.

[JURIST] The Intermediate People's Court of Shijiazhuang on Thursday declared bankrupt Sanlu Group, the Chinese dairy company at the center of the contaminated milk scandal that killed six and sickened 300,000. As a result of a court order to compensate families whose children were sickened by the tainted milk, the company borrowed money, causing its debt to surpass its assets. The court order found that because the company had failed to repay debts owed to its 274 creditors, it met the conditions for bankruptcy. The company's former chairwoman was sentenced to life imprisonment last month for her involvement in the scandal. She has since appealed the sentence, claiming that it was not she who decided to sell milk with higher levels of melamine, but a board member tabbed by New Zealand dairy firm Fonterra, which held a large share in Sanlu Group. More than 17 defendants have faced criminal charges in connection with the contamination. Also last month, lawyers for the families of 213 Chinese children sickened or killed by the contaminated milk petitioned the Supreme People's Court, China's highest court, to hear a class action lawsuit against 22 dairy companies involved in the contamination, seeking more than $5 million in damages.

Full post as published by JURIST - The Paper Chase on February 12, 2009 (boomark / email).