Popular applesauce brand WanaBana is facing financial collapse after filing for Chapter 7 bankruptcy on May 15, 2024. This decision comes amidst ongoing lawsuits following a major lead contamination recall in late 2023 in which pouches of its applesauce were found to contain cinnamon which had been tainted with lead.
Selling Assets to Pay Debts
Chapter 7 bankruptcy, unlike Chapter 11, signifies a complete company shutdown. WanaBana will not attempt to restructure or repay debts. Instead, the company will sell off its assets to satisfy creditors. Court documents reveal a staggering $26 million debt owed to potentially hundreds of creditors, with only a meager $500,000 to $1 million in remaining assets.
To further complicate matters, WanaBana faces lawsuits and an investigation by the New York Environmental Protection Bureau.
Lead Contamination Recall Sparks Lawsuits and Health Concerns
The bankruptcy filing stems from a critical recall issued in November 2023. Three WanaBana products containing contaminated cinnamon were pulled from shelves. Officials discovered lead levels exceeding 2,000 times the FDA's proposed limit. These recalled pouches are suspected to be linked to dozens of illnesses in children across the US. While the FDA confirms 90 cases, the investigation is still ongoing.
Authorities suspect economic motives behind the cinnamon contamination. Adding cheaper, lead-containing fillers like red brick dust or lead chromate to enhance the spice's color might have been the culprit.
Health Risks Posed by Lead Contamination
Health officials have shared that elevated blood lead levels in children who consumed the contaminated pouches were up to eight times higher than the reference level. Tests of the applesauce showed that the levels of lead in the puree exceeded the FDA's limit by more than 200 times.
This situation raises serious concerns about the long-term health effects on children exposed to the contaminated applesauce, as there is no level of lead exposure that is deemed safe for children.
