Wellington: The Chinese firm that sparked a nationwide tainted milk crisis that made nearly 3,00,000 children ill and killed six has been declared bankrupt, New Zealand shareholder Fonterra said on Wednesday.
A court in Shijiazhuang in the northern province of Hebei had issued a bankruptcy order against Sanlu Group, the company whose melamine-tainted baby formula triggered the crisis in September, said Fonterra.
The world’s biggest international trader of dairy products, Fonterra held a 43% stake in Sanlu, one of 22 dairy companies identified as selling toxic milk products.
“This bankruptcy order is not a surprise to us. We were aware that Sanlu was in a very difficult situation and faced mounting debts as a result of the melamine contamination crisis,” said Fonterra chief executive Andrew Ferrier.
Sanlu would be managed by a court-appointed receiver who would assume responsibility for selling the company’s assets and payment of creditors over the next six months, Ferrier said.
Fonterra has written off its $114 million investment in Sanlu.
Earlier this month China dramatically raised the official tally of children sickened by dairy products laced with the industrial chemical melamine to 2,94,000, and said six babies may have died from drinking toxic milk.
Melamine is a chemical normally used in making plastics but it emerged in September that it had been routinely mixed into watered-down Chinese milk and dairy products to give the impression of higher protein content.
Melamine can cause kidney stones if taken in excessive levels and babies who were fed tainted milk powder suffered the worst.