Costco Getting Back Peanuts Purchased for Sunland

Costco Wholesale Corp.’s attempt is moving forward to keep millions of dollars in peanuts from being…

Costco Wholesale Corp.’s attempt is moving forward to keep millions of dollars in peanuts from being included in the liquidation of Sunland, Inc., once the largest organic peanut butter processor in the U.S. The Issaquah, WA-based corporate giant found peanuts it was acquiring to help Sunland locked up when the New Mexico peanut processor filed for Chapter 7 bankruptcy. The peanuts might have been included as Sunland assets to be divided up among its many creditors.

But, in pre-Christmas hearings before U.S. Bankruptcy Judge David T. Thuma in Albuquerque, a complex deal was reached that allows Costco to take possession of the shelled peanuts. The short version is that Costco will have to pay accumulated monthly storage costs to two local peanut storage companies. One is owed $14,700, and $10,731 is due to the other. Storage rates are $2,100 and $1,470 per month, respectively.

Once the storage charges are paid, Costco will be allowed to remove the peanuts it originally acquired for Sunland when the Portales, NM, business was temporarily shut down by the U.S. Food and Drug Administration while it managed a recall of multiple products for possible contamination.

In 2012, an outbreak of Salmonella Bredeney infections of 42 people in 20 states was linked to peanut butter manufactured by Sunland. The outbreak forced Sunland into recalls of multiple brands of the peanut butters it made, including one organic brand it produced for the Trader Joe’s grocery chain.

Sunland had to cease operations for about four months in late 2012 and early 2013. It was during that time that Costco agreed to become its peanut purchaser. Immediately after Costco pulled out of the deal, Sunland filed for Chapter 7 bankruptcy.