Florida Trading Company Goes Bankrupt Over Melamine-Contaminated Milk Exports From China
Florida-based import/export company Exim-Brickell filed for Chapter 7 bankruptcy in the U.S. Bankruptcy Court for the Southern District of Florida Aug. 3, amid a lawsuit over melamine-contaminated powdered milk the company exported from China to Venezuela. The bankruptcy filing shows the company owes about $200 million to various creditors, but only has $300 in office supplies to its name. The milk was shipped during the 2008-09 scare over melamine contamination, after cost-cutting Chinese milk producers adulterated their milk with the kidney-damaging chemical to boost its apparent protein content.
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According to an unpublished opinion from the U.S. Court of Appeals for the 11th Circuit, Exim-Brickell was contracted by Venezuelan state-owned purchasing company Bariven to buy powdered milk in China, and ship it to Venezuela. At the time, Venezuela was suffering through a food crisis. Through its agent, PDVSA Services, Bariven bought 26,000 metric tons of enriched powdered milk from Exim-Brickell valued at $124.41 million. The powdered milk was shipped in monthly installments, beginning in June 2008.
After reports of melamine contamination of milk in China began to circulate in September 2008, Bariven contacted Exim-Brickell with contamination concerns. Despite Exim-Brickell’s initial representations to the contrary, testing by Bariven in March 2009 conclusively showed melamine contamination in the powdered milk Exim-Brickell was bringing into Venezuela. As the contract unraveled, Exim-Brickell sued Bariven for $56.6 million in damages for breach of contract related to Bariven’s purportedly delayed testing of the milk. Bariven countersued for $74.1 million, citing the contractual provision that the product be free of toxic substances. The Southern Florida U.S. District Court in 2011 awarded Bariven $6.7 million, after finding Bariven tested the milk too late on all but two shipments and so repudiated the contract. But the on appeal, the 11th Circuit found Bariven did not repudiate the contract on most of those shipments, and remanded for the lower court to award more damages.
Exim-Brickell declared bankruptcy before the District Court could act. According to the bankruptcy filing, the company owes about $204 million, including $75 million to both Bariven and its agent PDVSA Services because of “judgments.” The company owes Suncare and Dairygold, its Chinese suppliers of the allegedly contaminated milk powder, about $52.2 million. And its legal debts amount to nearly $1 million, including $918.792.94 to Akerman Senterfit and $43,601.40 to Baker & McKenzie. Exim-Brickell has about $300 in assets, including “2 desks, 6 chairs, 3 staplers, one two drawer file cabinet, one computer, [and] one [monitor].".
Email ITTNews@warren-news.com for a copy of the bankruptcy filing or the appeals court’s ruling.