Topps Meat Company Bankruptcy Sale Leaves Little for Victims of E. Coli Tainted BeefJan 14, 2008 | Parker Waichman LLP
Topps Meat Company, driven out of business after its E. coli tainted meat sickened dozens of people, was sold for $1.25 million last week. But while the sale marks the end of Topps Meat Company, it does not mean the end of the legal issues surrounding the Topps Meat Company E. coli outbreak. According to an article filed by the Associated Press, the bankruptcy trustee involved in the Topps case could pursue insurance claims on behalf of the company’s unsecured creditors who will otherwise see almost nothing as a result of the bankruptcy. Those unsecured creditors include people who where sickened by E. coli tainted Topps Meat. According to the AP article, some victims of the Topps ground beef E. coli outbreak have already chosen to pursue lawsuits on their own.
The Topps Meat Company was once a leading US frozen ground beef processor. On September 25, 2007, Topps recalled more than 300,000 pounds of frozen ground beef after it was tied to 6 cases of E. coli in New York State. Dozens more cases of E. coli linked to tainted Topps ground beef were soon confirmed around the country. By September 29, Topps had recalled another 21.7 million pounds of meat. Before it was over, at least 40 people in the US and Canada had been sickened by the E. coli tainted Topps Meat.
A subsequent investigation by the US Department of Agriculture (USDA) found that in the months prior to the recall, Topps was ignoring many standard safety procedures at its New Jersey plant. For example, Topps had quit testing its meat for bacterial contamination once a month, and was only doing so three times per year. What’s more, Topps did not require its domestic beef suppliers to test their meat, and the company often mixed tested and untested meat together. Topps also got a substantial amount of meat from foreign suppliers – including countries where E. coli is known to be a problem. The worst thing about the lax safety procedures at the Topps Meat Company plant in New Jersey is that they were occurring right under the noses of USDA meat inspectors. According to the agency, inspectors visited the plant on a daily basis and spent between one and two hours there each day. Yet, the company was never cited over safety issues.
The fallout from the Topps ground beef recall was too much for the 67-year old company, and by November it had shut its doors and declared bankruptcy. According to the AP, the Topps name and company equipment were sold for $800,000 to TMC Acquisition Co., whose principal is William Morris, an owner of Hickory Foods Inc. of Jacksonville, Fla. Hickory's brands include frozen Bubba Burgers. TMC will also pay up to 10 cents a pound for 2.2 million pounds of hamburger. MSDT Acquisition, an affiliate of sausage maker Premio Foods of Hawthorne, New York, bought the remainder of the Topps lease and its flash-freezing equipment for $250,000..
Most of the $1.25 million raised in the Topps Meat Company bankruptcy sale will go to RBS Citizens Bank of Philadelphia, which had a secured claim because it loaned Elizabeth-based Topps $14.5 million. About 5,000 unsecured creditors – including those seeking damages as a result of the Topps ground beef E. coli outbreak – could split the $107,500 and eventually see more money through litigation by the trustee. The Topps bankruptcy trustee told the AP that a bout 40 creditors may get payments through claims to Topps' insurance carriers, while eight creditors have filed their own lawsuits. Some of those lawsuits are from the 40 people in eight states who were sickened after eating Topps beef.