Topps Ground Beef Recall Forces Company into BankruptcyNov 26, 2007 | Parker Waichman LLP
Topps Ground Beef Recall Resulted In Bankruptcy
The Topps ground beef recall has resulted in the 67-year-old meat processor's bankruptcy. Topps had shut it doors in October, just after recalling more than 21 million pounds of ground beef that ultimately sickened dozens of people across the country. Last week, Topps filed for federal bankruptcy protection, blaming the economic impact of the Topps ground beef recall for its decision.
Topps Meat Company, a leading US frozen ground beef processor, recalled over 330,000 pounds of frozen ground beef patties late September following an E. coli outbreak in New York that sickened six people and was linked to one of its products. While investigating the Topps ground beef E. coli outbreak, health authorities discovered a box of Topps frozen ground beef patties in one of the victim's freezers. Testing revealed the patties were infested with E. coli O157:H7. Days later, Topps recalled another 21 million pounds of beef.
E. coli 0157:H7-Escherichia coli 0157:H7-is one of hundreds of E. coli strains, the vast majority of which are harmless. Strain 0157:H7 is quite virulent, producing a powerful toxin that can cause severe illness and even death and is the leading cause of food and waterborne illness in the US. According to Centers for Disease Control (CDC) estimates, there are over 70,000 cases of infection and 61 deaths occurring in the US annually with most linked to undercooked or contaminated meat.
25 People In Eight Other State Fell Ill
Within days of the first recall, 25 people in eight oherstates fell ill. By September 28, cases of E. coli poisoning had been reported nationwide with five victims requiring hospitalization. Ultimately, at least 40 people were sickened, which raised questions about the effectiveness of inspections. The agency was also scrutinized for a delay of several weeks in requesting the recall after tests showed Topps meat was linked to illness from E. coli. Federal investigators said the company failed to require adequate testing of raw beef purchased from domestic suppliers and it sometimes mixed tested and untested meat in its grinding machines.
The Topps case is one of the largest and most serious of 16 recalls this year involving E. coli beef contamination; federal and state health officials found at least three types of the O157:H7 strain in the plant. Following the first recall, the US Department of Agriculture (USDA) inspected Topps' Elizabeth, New Jersey plant. Beef grinding operations were suspended after inspectors discovered inadequate bacterial contamination prevention controls. By September month-end, Topps expanded its recall to include another 21 million pounds of frozen ground beef distributed to retail outlets and food service institutions nationwide. The contamination source was likely Rancher's Beef Ltd., a Topps supplier based in Alberta, Canada.
On October 5th, Topps shut its doors, laying off most of its employees. According to papers filed Wednesday in federal bankruptcy court in Newark, Topps cited the "severe economic impact of the recall" as the reason it was forced to cease operations and that its property in Elizabeth and elsewhere "poses or is alleged to pose a threat of imminent and identifiable harm to the public health or safety."
Topps listed assets of up to $100 million with liabilities of up to the same amount. Nearly 5,400 people were listed as creditors along with companies, including Tyson Foods. Strategic Investments and Holding, the investment firm in Buffalo that bought Topps in 2003, was also listed as a creditor, as were several high-level managers at Topps, including Anthony D'Urso, a vice president. The filing did not specify how much money each creditor was owed.
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