Chinese company at the root of tainted milk scandal declared bankrupt

A Chinese court has declared the company at the center of a tainted milk scandal bankrupt.


The milk is blamed for killing six children and sickening nearly 300,000 more.

New Zealand's Fronterra Group said that a court in Shijiazhuang, in China's Hebei province, issued a bankruptcy order against Sanlu Group Co. in response to a petition from a creditor.

"Sanlu will now be managed by a court-appointed receiver who will assume responsibility for an orderly sale of the company's assets and payment of creditors," Fonterra chief executive Andrew Ferrier said in a statement.

Sanlu was one of 22 Chinese dairy companies whose products were found to contain high levels of the industrial chemical melamine, leading to the deaths of six babies and causing 294,000 others to suffer from urinary problems.

Fronterra, a New Zealand farmer-owned co-operative, owns 43 per cent of Sanlu.

At least a dozen individual lawsuits have been filed against state-owned Sanlu, but they're caught in legal limbo as courts have neither accepted nor refused the cases - a sign of the scandal's political sensitivity.

China's government has promised to provide free medical treatment to the children who fell ill due to the milk, along with unspecified compensation to them and families of the deceased.

The Health Ministry had said earlier this month that some Chinese dairy companies would likely have to pay for a compensation plan, the details of which have not been released.

Fronterra was responsible for alerting Chinese authorities to the tainted milk scandal in August.