By staff reporter Wang Shanshan

From Caijing Online

Sanlu Group, the dairy at the center of a nationwide contaminated milk scandal, has been officially declared bankrupt after failing to repay 1.1 billion yuan in debts.

The Intermediate People’s Court of Shijiazhuang, Sanlu’s hometown, announced the ruling February 12 during the first meeting of some of the company’s estimated 274 creditors.

At the hearing, Sanlu’s credit manager announced a plan for managing assets along with a variable price scheme.

The bankruptcy ruling is seen as the last nail in the coffin for the company, which was one of China’s largest producers of dairy products before a toxic additive was found in its baby formula last year.

A major figure in the nationwide scandal, in which tainted milk sickened nearly 300,000 children and killed six, Sanlu halted operations September 12 and filed for bankruptcy December 23. Meanwhile, former company chairwoman Tian Wenhua was convicted for her role and sentenced to life imprisonment.

According to government figures, Sanlu has assets worth 1.56 billion yuan and 2.66 billion yuan in liabilities. The dairy Beijing Sanyuan Foods Co., which may be preparing to buy Sanlu’s assets, said it is waiting for an audit report from the credit manager before deciding its next step.

Wang Qin, board secretary at Sanyuan, told Caijing “there are still great uncertainties about the audit of Sanlu’s assets. We will decide how to participate... after the audit report is released.”

Trading in Sanyuan shares has been suspended since September 25 due to the possible acquisition.

Chinese story: http://www.caijing.com.cn/2009-02-12/110055555.html