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Sunland files Chapter 7 bankruptcy following product recall

In business there are various hurdles which a company could face that may be financially detrimental to the company. Many companies in Texas and other states are able to weather the storm, however many are just not able to recover from a significant financial hardship. This seems to be what had happened to Sunland, Inc. After a product recall and a forced shutdown of its plant, the company is now filing for Chapter 7 bankruptcy.

The company has admitted that it was not able to recover from the financial impact from a recall of its peanut butter product following a salmonella outbreak in Sept. 2012. The outbreak resulted in 41 people becoming sick in 20 states across the United States. The company recalled over 100 products following the salmonella outbreak. The government also forced the company to shut down its peanut butter production plant.

Although the company eventually reopened the plant in March 2013, the damage had already been done. The company ran into constant liquidity issues which made it necessary to file for Chapter 7. Sunland admitted to as much as $100 million in liabilities with anywhere from 1,000 to 5,000 creditors. The petition also listed $10 million to $50 million in assets. Workers were notified in early Oct. 2013 that the plant was being shut down, which will result in numerous job losses that will impact the local community.

The Chapter 7 bankruptcy will liquidate all of the company's assets, and the company will cease to exist as a business entity. However, this type of bankruptcy typically discharges all debts owed by a company in Texas or in another state. It is often seen as a responsible manner for businesses to confront financial issues that have become unmanageable. It may also offer the company executives an opportunity to begin a brand new chapter in their careers.

Source: Albuquerque Journal, Sunland ceases operations, files Chapter 7 bankruptcy, No author, Oct. 9, 2013

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