Va.-based peanut company executives seek bite of $1 million policy

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Former executives and managers of a Lynchburg, Va.-based peanut distributor at the center of a recent salmonella outbreak are seeking thousands in legal fees from the company’s insurance company.

peanut moneyCiting documents in U.S. District Court in Lynchburg, at lease five former employees of Peanut Corporation of America (PCA) are seeking a piece of a $1 million corporate insurance policy, according to the Lynchburg News Advance. In September, a federal judge allowed the Federal Insurance Co. to deposit the funds in a court account, with a judge deciding how to divide the money.

The policy was taken out to cover claims made against PCA and to provide corporate liability for the company from December 2007 through April, the report said.

Earlier this year, PCA filed for bankruptcy protection following a salmonella outbreak the U.S. Food and Drug Administration traced to one of its facilities in Georgia. The Centers for Disease Control determined that 714 people became sick in 46 states and Canada as a result of the outbreak. Infections from the outbreak may have contributed to nine deaths, including two in Virginia.

Citing Federal Insurance Co. filings, four executives, including PCA President Stewart Parnell, and three former plant managers are seeking thousands for legal fees and two former members of the company’s board of directors are seeking money for unspecified uses. Parnell is seeking $951,000 of the $1 million policy for his own legal defense, the News Advance reported.

A recent U.S. District Court settlement paid $125,000 of the insurance money to PCA’s estate to go toward those making claims against the company in bankruptcy court. The settlement also noted that those seeking claims against the remaining money are also likely to reach an agreement among themselves on how to divide the money for submission to the judge for approval, the report said.

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