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          BIZCHINA> Top Biz News
          China milk scandal firm faces huge debts
          (Xinhua)
          Updated: 2008-12-25 18:41

          A Chinese court has accepted a bankruptcy petition for Sanlu Group which was at the center of a tainted milk scandal and is facing huge debts, an official said on Thursday. 

          China milk scandal firm faces huge debts
          Sanlu's distributors gather around its headquarters, December 24, 2008, trying to get their money back. A Chinese court has accepted a bankruptcy petition for Sanlu Group which was at the center of a tainted milk scandal and is facing huge debts, an official said on Thursday. [CFP]

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          China milk scandal firm faces huge debts Two dairies set to snap up Sanlu

          Wang Jianguo, spokesman for the city government of Hebei provincial capital Shijiazhuang, said here that the Intermediate People's Court of Shijiazhuang City has accepted the petition made by the Heipingxi Road branch of Shijiazhuang City Commercial Bank, a creditor of Sanlu.

          Sanlu Group now faced 1.1 billion yuan ($160 million) of net debts, Xiang said at a press conference.

          As of October 31, financial auditing and assets appraisal showed the group's total assets were worth 1.56 billion yuan while its total debts were 1.76 billion yuan, the spokesman said.

          On December 19, Sanlu Group borrowed 902 million yuan to pay the medical fees of children sickened by its melamine-tainted baby formula and to compensate the victims.

          Sanlu products were found to contain melamine, which was being used to increase the apparent protein content in milk. The use of the industrial chemical is restricted in food.

          Children can develop kidney stones after drinking such milk.

          The scandal surfaced in September. Some other dairies' products were also found to contain the chemical. The Ministry of Health has said it was likely the contamination killed six babies. Another 294,000 infants suffered from urinary problems such as kidney stones.

          Sanlu stopped production on September 12. As of October 31, the group recalled more than 10,000 tons of baby formula products worth nearly one billion yuan.

          In the past few days, several hundred salespeople had come to Shijiazhuang to ask for the money Sanlu owed them after word of the company's bankruptcy spread.

          The group raised 300 million yuan in October and paid each of the agents 30 percent of the money owed to them, according to Wang.

          Wang said another 30 percent would be paid on January 10.


          (For more biz stories, please visit Industries)

           

           

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