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Miami firm files Chapter 7 bankruptcy over milk scandal

An importer of a food or drink does not personally manufacture the goods it resells. Therefore, it must have an excellent relationship with its supplier. The importer counts on the supplier to be honest about ingredients, avoid contaminants, and use a consistent formula when making the product. It can be challenging for the importer to insure a reliable level of quality, especially when the supplier is located in a different country where standards may not be as high as in the United States. If an imported food or beverage causes people to become sick, the importer’s business can be decimated, necessitating the filing of a Chapter 7 bankruptcy action. 

A Miami firm found itself in a difficult situation after it entered into a contract to import powdered milk from a supplier in China to a company located in Venezuela. The 2008 contract between the Miami firm and the Venezuelan company was for powered milk worth $124 million dollars. When reports surfaced that some batches of powdered milk from China were mixed with melamine, a toxic chemical, a scandal ensued. The Venezuelan company filed a lawsuit against the Miami firm and successfully obtained a judgment of $75 million.

The litigation and tarnished reputation appears to have destroyed the Miami firm’s business. In sharp contrast to its debts which total $204 million, the firm has listed a mere $300 in assets. When a company is faced with substantial legal and financial hurdles together with overwhelming debt, it can be difficult to resolve the problems. A conversation with an lawyer who specializes in bankruptcy law may be the best option.   

Source: South Florida Business Journal, “Toxic milk prompts $200M bankruptcy for Exim Brickell,” Paul Brinkmann, Aug. 6, 2013

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