PORTALES, N.M. (AP) — A bankruptcy judge is allowing an eastern New Mexico peanut butter plant involved in a nationwide salmonella outbreak last year to resume limited operations.
Sunland Inc. in Portales closed its doors and filed for Chapter 7 bankruptcy in October.
Judge David Thuma’s order Wednesday authorizes the bankruptcy trustee to hire workers to deliver customer inventory but not to process peanuts of peanut products, the Portales News-Tribune reported.
Under the order, Sunland could be open for at least the next 12 months, pending the sale of its assets.
It isn’t clear how many employees the trustee might hire to assist in getting the inventory to Sunland customers and keep up equipment. The company had about 100 workers when it shut down.
Sunland’s attorney, William Arland III, said he suspects the company will operate “with something like a skeleton crew.”
Much of the equipment at Sunland is new, purchased within the last year to comply with a federal order that shut down the plant for months after its products were linked to 41 salmonella cases in 20 states.
The estimated $20 million worth of peanuts that Sunland has in storage are the focus of a legal fight involving trustee Clarke Coll, Costco Wholesale Corp. and two of Sunland’s other largest creditors, CoBank and Production Credit Association of Southwest New Mexico.
Costco, which fronted Sunland the cash to purchase the peanuts, has asked the judge to release the legumes, which would keep them out of the asset sale.
Coll is opposed to releasing the peanuts to Costco, arguing that the membership warehouse company owes Sunland about $4 million for peanut butter it processed as part of a contract Costco canceled, resulting in the bankruptcy.
Thuma has set a Dec. 23 hearing to resolve the issue.
Arland said Coll is in full control of operations at Sunland under bankruptcy court rules.
According to its bankruptcy filing, Sunland had an estimated $10 million to $50 million in assets, $50 million to $100 million in liabilities, and 1,000 to 5,000 creditors.
The Food and Drug Administration shuttered Sunland’s plant in September 2012 after the salmonella outbreak. Most of the food poisoning cases were linked to natural peanut butter the company made for Trader Joe’s.
Sunland recalled more than 100 nut and peanut butter products after the outbreak.