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SCMP Reporter

Sanlu Group, whose melamine-tainted products triggered the milk contamination scandal in September, has been declared bankrupt by a  court in Hebei province,  sending hundreds of anxious suppliers and distributors rushing to   the provincial capital yesterday with their claims.
Its New Zealand partner Fonterra, which  has a 43 per cent stake in the milk powder producer, said   a court in Shijiazhuang, the provincial capital,  issued the bankruptcy order  in response to a creditor's petition.
Sanlu will now be managed by a court-appointed receiver, who will assume responsibility for an orderly sale of  its assets and payment of its creditors. The receiver  had six months to conclude the process,  Fonterra said.
'This bankruptcy order is not a surprise to us,' said  Andrew Ferrier, the chief executive of Fonterra,  which has completely written off its NZ$201 million (HK$893.53 million) investment in Sanlu.
'We were aware that Sanlu was in a very difficult situation and faced mounting debts as a result of the melamine contamination crisis.'
Xinhua  said Sanlu  had received the court order and  was  complying fully with the legal process.
Sanlu's products were first found to be laced with melamine, an industrial chemical.
The scandal, which later  widened  with 22 other mainland  dairy firms found using the substance,  not only rocked the mainland's milk industry but also tarnished the 'Made in China' label around the world.
Government data shows as many as six babies died and more than 290,000  others nationwide had shown symptoms of urinary disorders after  taking the tainted products.
At least 12 individual lawsuits have been filed against state-owned Sanlu, but they are caught in a legal limbo as courts have neither accepted nor refused the cases.
News of Sanlu's bankruptcy sent  400 to 500 of Sanlu's suppliers and distributors from around the nation - who claimed  the firm owed them  up to 1 billion yuan (HK$1.13 billion) in prepayments or deposits -  rushing to Shijiazhuang, the firm's base.
They gathered at the  provincial government offices, demanding  a solution.  They chanted 'We want to see the governor' and 'We believe the Communist Party and the government will give us a reasonable solution',  an observer said.
About 100 policemen were deployed to keep order,  said  a distributor surnamed Xu, who said Sanlu owed her 100,000 yuan in prepayments. 'Three months have passed since the  scandal broke out, but  until now we have not got clear reply either from Sanlu or the government about when we can get our money back,' she said.
A spokesman  for Beijing Sanyuan Foods, which has been in talks to acquire Sanlu, said Sanyuan would adjust its acquisition plan in line with  developments in the case.
Vincent Fok, an executive director of Ferrier Hodgson, a corporate restructuring and recovery firm, said the mainland bankruptcy order enabled the appointed administrator to investigate, review and restructure the company and help it find a white knight at an early stage.
'The bankruptcy order can facilitate the restructuring, which will benefit potential buyers,' said Mr Fok.
Soured investment
Sanlu's New Zealand partner Fonterra has written off its investment of, in NZ$: $201m



Tainted milk firm Sanlu declared bankrupt, faces wave of claims