Valencia peanut growers in Texas and New Mexico may be scrambling for a new buyer after officials at Sunland peanut butter plant in Portales, New Mexico, announced they have filed for Chapter 7 bankruptcy over troubling financial and liquidity challenges.

If approved by a U.S. bankruptcy court, the plant, located in Portales in eastern New Mexico, must permanently close and liquidate all assets according to terms of Chapter 7 rules of the U.S. Bankruptcy code.

Company officials cite ongoing financial difficulties as the primary reason for the filing. The company was required by the Federal Drug administration (FDA) last year to shutter the plant after peanut butter processed at the plant were linked to a nationwide salmonella outbreak involving 41 cases in 20 states.

FDA inspectors cited the company after a month-long investigation, saying salmonella had been discovered in 28 locations throughout the plant and in several nut butter samples. Sunland, Inc. is the nation's largest producer of organic peanut butter. They produced organic peanut butter under different labels for a number of retailers nationwide including Costco, Kroger Foods and Trader Joe's, as well as producing organic peanut butter under their own label.


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In late December, Sunland announced that the food facility registration for its Portales, New Mexico, location had been reinstated. That followed an agreement reached between federal inspectors and plant officials that called for an independent, third party inspection of the facility to determine if the problems discovered from previous inspections had been corrected.

In January, Sunland put most of the employees laid off following the recall last year back to work and soon thereafter began making payment arrangements with New Mexico and Texas peanut growers who were owed money for peanuts sold to the company but not yet processed when FDA shuttered the plant.

Officials say the eight-month closure that began last year was more than the company could financially overcome and the decision to file for Bankruptcy came as a last resort.