Yesterday we told you that Sunland Foods Inc., the peanut butter plant behind the Great Peanut Butter Recall of 2012, was being sold at a bankruptcy auction. Sure, you could say that makes the company the big loser in peanut-gate. But today we learned the real losers are all the lovers of the creamy, nutty food. Why? Because the company is dumping 950,000 jars of safe, edible peanut butter into a New Mexico landfill following a dispute with Costco.

The massive peanut butter dump was initiated after Costco Wholesale refused to take shipment of the product and declined requests to let it be donated to food banks, repackaged or sold to brokers who provide food to institutions like prisons, NPR reports.

The peanut butter was made from $2.8 million worth of Valencia peanuts owned by Costco. After testing the product, Costco agreed to a court order authorizing the Sunland bankruptcy trustee to sell the retailer the peanut butter.

However, after receiving eight loads of the product Costco determined it could not sell the jars because of leaky peanut oil.

While both companies agreed there was no health or safety issue with the peanut butter, Costco said it would not agree to any arrangement other than destruction.

And so, 25 tons of the peanut butter, valued at $2.6 million, is being hauled to the Curry County landfill in Clovis, NM, where it will be covered in dirt.

Before closing, Sunland produced peanut butter under a number of labels for retailers like Costco, Kroger and Trader Joe’s.

The plant was originally shut down by the Food & Drug Administration for eight months in 2012 after it was linked to 41 salmonella cases in 20 states.

FDA investigators found salmonella bacteria at 28 sites in the plant, and contaminated samples of various nut butters. Inspectors also found unclean equipment and employees handling products improperly. Uncovered peanuts were left outside to collect rain and bird poop.

After a short reopening the plant closed for good in October 2013 when the company filed for Chapter 7 bankruptcy.

Currently there are two companies vying for the Sunland plant: Hampton Farms of North Carolina, and Golden Boy Foods of Canada.

Hampton Farms won the original bidding last week, and it appeared that the bankruptcy court was just about to approve the $20 million sale on Wednesday morning when Golden Boy Foods called in with a $25 million offer. Hampton Farms then raised their bid to $25.1 million, but has made it clear that they believe the court should go by the results of the original bidding.

Cases of Edible Peanut Butter Dumped After Bankruptcy Dispute [NPR}

Want more consumer news? Visit our parent organization, Consumer Reports, for the latest on scams, recalls, and other consumer issues.