Facing Applesauce Lead Poisoning Lawsuits, Wanabana Files for Chapter 7 Bankruptcy

Wanabana, the makers of apple cinnamon fruit puree pouches recalled last year due to high levels of lead contamination, now seeks Chapter 7 bankruptcy, which, if approved, means the company will be liquidated and cease to exist.

The company submitted a petition for Chapter 7 bankruptcy (PDF) in U.S. Bankruptcy Court for the District of Delaware on May 24, indicating that the company faces $26 million in debt, with only about half a million to $1 million in assets.

The announcement comes in the wake of a WanaBana fruit pouch recall announced by the U.S. Food and Drug Administration (FDA) last October, after sample testing identified high levels of lead in several batches of the cinnamon-flavored apple sauce. The recall was later expanded to include additional products sold under the Weis and Schnucks brands. It was expanded once again in March to include products sold by Dollar Tree and Family Dollar, Save A Lot, La Superior SuperMercados, SF Supermarket, Patel Brothers and La Joya Morelense.

The FDA determined in April that the excessive lead came from a ground cinnamon processor in Ecuador, named Carlos Aguilera. The agency indicated the inclusion of the lead was likely intentional, in order to maximize profits at the cost of children’s safety.

Since the original recall, several parents have filed Wanabana fruit pouch lawsuits after their children were diagnosed with lead poisoning from allegedly eating the applesauce products.

Chapter 7 bankruptcy is not an effort to save and restructure the company, as in Chapter 11 bankruptcies. Instead, the company is throwing in the towel, leaving its debtors to divide up the company’s assets for whatever value they have.

This will severely limit the amount of financial compensation families may be able to receive from the company through lead poisoning lawsuits, regardless of how negligent the company was in allowing products to be distributed with high amounts of lead that caused severe developmental problems for children. The products were found to contain more than 2,000 times the U.S. legal limit for lead in food.

“It is desirable and in the best interests of the Company, its creditors, and other interested parties, that a voluntary petition be filed by the Company under the provisions of Chapter 7 of the Bankruptcy Code,” the bankruptcy filing states.

No official statement outside of the bankruptcy filing has yet been made by the company.

Lead Poisoning Risks

According to the U.S. Centers for Disease Control and Prevention (CDC), as of March 22 there were a total of 519 cases of lead poisoning linked to the recalled applesauce pouches, 136 of which have been confirmed, 345 of which have been deemed probable, with another 38 cases suspected of being linked to the tainted products.

Lead is toxic heavy metal that can cause permanent brain damage or other severe, long-term health consequences to all individuals, and especially to children, who are still developing and often do not show immediate signs or symptoms of lead exposure.

Short-term exposure can cause minor symptoms, including headaches, abdominal pain, vomiting, or anemia, while longer exposure can result in more severe symptoms, including lethargy, fatigue, irritability, abdominal pain, headache, weight loss, tremors, and muscle exhaustion, aches, prickling, or burning.

Prior research has shown that childhood lead exposure can reduce the brain’s structural integrity, which can lead to cognitive problems and reduced IQ scores later in life.

Children are susceptible to long-term brain damage at even low amounts of lead exposure. According to the American Academy of Pediatrics (AAP), there is no safe lead exposure level among children, and any exposure can increase the risk of developing nervous system injuries, brain injuries, seizures, convulsion, mental retardation, delayed growth, obesity, coma, and even death.

Other studies have indicated that ,children who sustained lead poisoning had difficulty learning and developing after exposure and scored lower on standardized testing. Another study suggested that even very low lead blood levels in children was linked to an increased risk of developing kidney damage, and increased risk of attention-deficit hyperactivity disorder (ADHD), suggesting lead exposure could be a contributing factor for nearly 30% of childhood ADHD.

Health experts warn any exposure to lead, even at low levels, is likely a frequent and unacknowledged contributor to deaths in the United States, causing approximately 412,000 deaths occur each year.

In March, the FDA sent a letter to cinnamon manufacturers’ processors, distributors and facility operators, indicating it is their responsibility “to implement controls to prevent contamination from potential chemical hazards in food, including ground cinnamon products.”