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Milk scandal-tainted Sanlu files for bankruptcy

  • Story Highlights
  • Sanlu was one of China's leading dairy producers
  • Some Chinese dairy plants added melamine to milk products to boost protein levels
  • Ingesting melamine can lead to kidney stones, eye and skin irritation, experts say
  • Official: Melamine was found in nearly 70 milk products from more than 20 firms
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BEIJING, China (CNN) -- Sanlu Group, the company at the center of China's tainted infant formula scandal, has filed for bankruptcy.

Markets withdrew Sanlu milk powder in September after melamine was found as an additive.

Markets withdrew Sanlu milk powder in September after melamine was found as an additive.

A court in Shijiazhuang, China, where the company is based, told CNN Wednesday it has received the bankruptcy application.

Baby formula produced by Sanlu -- previously one of China's leading dairy producers -- was first flagged in the scandal when it recalled about 700 tons of the powdered milk in September after discovering the product was contaminated with melamine.

The poisonings killed six babies and sickened 290,000 others, according to China's Xinhua news agency.

Melamine is commonly used in coatings and laminates, wood adhesives, fabric coatings, ceiling tiles and flame retardants. Some Chinese dairy plants have added it to milk products to make it seem to have a higher protein level.

Melamine is the same industrial contaminant from China that poisoned and killed thousands of U.S. dogs and cats last year.

Health experts say ingesting melamine can lead to kidney stones, urinary tract ulcers, and eye and skin irritation. It also robs infants of much-needed nutrition.

Sanlu could be taken over by Beijing Sanyuan Food Company or Wandashan Dairy, Xinhua reported.

Chinese investigators found melamine in nearly 70 milk products from more than 20 companies, according to then-quality control official Li Changjiang, who was forced to resign.

Thousands of tons of tainted milk powder were recalled, including pullbacks by Mengniu Dairy Group, China's largest milk producer, and Sanlu.

In addition to Li's ouster, the fallout from the scandal led to arrest of at least 18 people in September and new government safety measures.

New Zealand-based Fonterra, which owns a 43 percent stake in Sanlu, said the Shijiazhuang court issued the bankruptcy order against the Chinese company in response to a creditor's petition.

Under the court order, according to Fonterra, a court-appointed receiver will manage Sanlu and assume responsibility "for an orderly sale of the company's assets and payment of creditors" within six months.

"This bankruptcy order is not a surprise to us," Andrew Ferrier, Fonterra's CEO, said in statement. "We were aware that Sanlu was in a very difficult situation and faced mounting debts as a result of the melamine contamination crisis."

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