The U.S. Bankruptcy Court for Northern Illinois today is expected to award the remainder of insurance coverage held by I.M. Healthy and Dixie Dew to victims of 2017’s E. coli O157: H7 outbreak involving the two companies.

Epidemiologic, laboratory, and traceback evidence indicated that I.M. Healthy brand Soy Nut Butter manufactured by Dixie Dew was the likely source of 32 infections of E. coli O157: H7 in 12 states during the spring of 2016. Illnesses started on dates ranging from Jan. 6, 2017, through Feb. 15, 2017. More than 80 percent of the victims were children.

Both I.M. Healthy and Dixie Dew filed for Chapter 7 Bankruptcy. The Court took control of insurance liability proceeds from the two companies that totals $11.25 million.

“Suits have been filed and claims have been asserted against Soy Nut for personal injury (“E.coli Claims”) arising out of the alleged manufacture, sale, handling or distribution of Soy Nut products allegedly contaminated with E.coli bacteria, by persons allegedly infected with E.coli bacteria in Soy Nut products sold by Soy Nut, according to court documents. “E.coli claimants may have also asserted  claims against certain customers of Soy Nut and/or retailers of  Soy Nut products.”

Twenty-six people who were victims of the I.M. Healthy/Dixie Dew outbreak filed claims with the court, which appointed a trustee to evaluate the applications. Gus A. Paloian has served as the trustee since the bankruptcy was filed on May 12, 2017. The values of the claims ranged from $25,000 to $25 million individually, based on the severity of the E. coli illnesses, for a total of $70 million.

The bankruptcy court paid out $6 million to claimants in October 2018 on a pro-rata basis. Today it is expected that the court will order the balance, $5.25 million to be disbursed by the court on Jan. 10 this year.

Once the bankruptcy court rules, the 26 claimants will continue litigation against the supply chain and retailers who sold the product, according to Bill Marler, the Seattle food safety attorney representing the plaintiffs.

Nine of the I.M. Healthy/Dixie Dew outbreak victims were known to have developed hemolytic uremic syndrome, a type of kidney failure. The victims were also young, with 81 percent under age 18. Younger people are most susceptible to the most severe injury from E. coli O157 infections.

Soy Nut was a marketer of Soy Nut Butter, a nut-free substitute for peanut butter.  Dixie Dew was its independent third party manufacturer, based in Erlanger, KY.

The Centers for Disease Control and Prevention and the Food and Drug Administration linked the soy nut butter to the E. coli outbreak in March 2017. The I.M. Healthy Original Creamy Soy Nut Butter was first recalled on March 3, 2017 and that recall was expanded March 10, 2017.

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Photo of Dan Flynn Dan Flynn

Editor Dan Flynn is a Northern Colorado-based writer and editor with more more than 15 years of food safety experience. As a public affairs professional, he worked with government and regulatory agencies at the local, state, and federal levels. His career as a journalist included working for newspapers throughout the West, from the Black Hills to Seattle. His on-scene reporting on the collapse of the Idaho’s Teton Dam and the suicide bombing at Washington State University’s Perham Hall was carried by newspapers around the world and was recognized both times regionally by the Associated Press for Best Reporting on a Deadline. Most of the disasters he attends these days involve food illnesses.