Applesauce maker files Chapter 7 bankruptcy amid lead recall lawsuits

Joshua Hallenbeck

6 months ago

(WJET/WFXP) — After a major applesauce recall in late 2023, applesauce producer WanaBanna filed for Chapter 7 bankruptcy on May 15, 2024.

Chapter 7 bankruptcy is different from Chapter 11; Chapter 7 is better known as a “liquidation” bankruptcy since there is no plan to restructure the company or any plans for repayment. The company will instead sell off assets to pay off their debts.

This image provided by the U.S. Food and Drug Administration on Thursday, Nov. 17, 2023, shows three recalled applesauce products – WanaBana apple cinnamon fruit puree pouches, Schnucks-brand cinnamon-flavored applesauce pouches and variety pack, and Weis-brand cinnamon applesauce pouches. U.S. health officials said Friday, Fan. 5, 2024, that recalled cinnamon applesauce pouches tied to lead poisoning in U.S. kids contained chromium, a chemical element that can be toxic. The cinnamon apple puree or applesauce pouches include those sold under the WanaBana brand at Dollar Tree stores and online and under the Schnucks and Weis brands in stores. Because they have a long shelf life, they may still be in consumers’ homes. Consumers should not eat or serve the pouches and should discard them. (FDA via AP)

According to court documents, the company currently owes $26 million to 1-49 creditors, while only holding an estimated $500,000 to $1 million in assets. The company is also facing multiple cases and an investigation by the New York Environmental Protection Bureau, with all the cases currently pending in court.

The bankruptcy follows a major recall in November 2023 of three WanaBanna products that contained cinnamon found to be contaminated with lead. Officials said that cinnamon tested from the plant had lead levels more than 2,000 times higher than the maximum level proposed by the FDA. The recalled pouches have been linked to dozens of illnesses in U.S. children with the FDA reporting 90 confirmed cases but the full investigation is still ongoing.

One theory is that the cinnamon may have been contaminated for economic reasons, agency officials said. That could mean an ingredient is added or subtracted from a food to to boost its value. For example, compounds like red brick, red lead salt, lead oxide and lead chromate, which mirror cinnamon’s red color, have been added to increase the value of the spice, research shows.

Health officials said that tests show children who ate the pouches had blood lead readings up to eight times higher than the reference level sparking concern. Additionally, officials said that samples of the puree showed lead contamination more than 200 times higher than the FDA allows.

The Associated Press contributed to this report.