Soy Butter Company Behind 12-State E. Coli Outbreak Goes Bankrupt

Image courtesy of Denise Krebs

SoyNut Butter Co., the company behind contaminated soy butter that made at least 32 people sick with E. coli and triggered a nationwide recall has filed for Chapter 7 bankruptcy, meaning it has no intention of sticking around.

Soy nut butter is a popular alternative to peanut butter, and is even purchased in bulk for schools and child care facilities where peanut products have been banned due to severe allergies in children who attend.

Out of the 32 confirmed cases, 26 of them were small children. The outbreak sent 12 people to the hospital, nine of whom developed a serious and potentially fatal complication, hemolytic uremic syndrome.

Food poisoning cases tend to be under-reported, since confirming a case requires visiting a doctor or hospital and having samples of feces or blood tested.

The Food and Drug Administration shut down the facility where the soy paste was produced, citing malfunctioning equipment, soy butter on the walls, and “black and brown apparent filth” in the room where the butter was produced.

The company also notes in the bankruptcy filing [PDF] that at its headquarters, there is still potentially contaminated soy butter inventory sitting around.

Bill Marler, a food safety attorney who is representing 17 of the victims and who is the publisher of Food Safety News, told the site that the company’s bankruptcy was “not unexpected,” and that he expects the contract manufacturer that made the soy butter, Dixie Dew, to file for bankruptcy as well in the coming months.

Soy Nut Butter Co. only has assets of less than $50,000, but estimates its debts at between $1 million and $10 million, including payments in lawsuits that have not yet been settled.