Bloomberg — A Mexican affiliate of Kimberly-Clark Corp. that sold hand sanitizer made with a toxic, industrial form of alcohol filed for bankruptcy, blaming the mistake on a scramble to find ingredients early in the pandemic’s supply-chain meltdown.
4E Brands Northamerica, a subsidiary of Kimberly-Clark de Mexico SAB de C.V. (KIMBERA), blamed its Chapter 11 case on a bad batch it made from methanol alcohol near the onset of the Covid-19 outbreak in 2020. Amid a shortage of hand sanitizers, 4E Brands sought new suppliers of ethyl alcohol, a federally approved ingredient, according to court papers filed Tuesday in federal court in Laredo, Texas.
The company “sourced some of its raw ingredients from opportunistic suppliers who, whether intentionally or mistakenly, provided methanol instead of ethyl alcohol,” David M. Dunn, the chief restructuring officer, said in court papers. The company now faces multiple personal injury and wrongful death lawsuits, he said.
Representatives for Kimberly-Clark and its sister company in Mexico didn’t immediately respond to messages seeking comment. Regulatory filings show Kimberly-Clark holds a 47.9% stake in Kimberly-Clark de Mexico, which isn’t part of the bankruptcy.
Short Supply
In 2020, the U.S. Food and Drug Administration reacted to a shortage of hand sanitizers by temporarily loosening restrictions on manufacturers, according to Dunn. 4E Brands ramped up production using new suppliers who sold the company the wrong type of alcohol, Dunn said in his filing.
4E Brands “did not know of the substitution. It believed ethanol was used to manufacture the hand sanitizer it distributed,” Dunn said, referring to the safer type of alcohol. “In fact, it contained methanol.”
In July 2020, federal regulators warned that 4E Brands hand sanitizer contained the toxic alcohol. The company sold its products under various names, including Blumen Hand Sanitizer and Assured Hand Sanitizer. A few weeks after the federal warning, the company recalled its products.
Since then, 4E Brands has shut down operations because most of its inventory was deemed worthless, according to the filings. All of the recalled hand sanitizer is being stored in warehouses in the U.S. The company plans to destroy the contaminated product and sell the safe hand sanitizer in Mexico.
The company’s remaining assets are worth less than about $50,000, according to its bankruptcy petition. It owes as much as $50 million. Dunn’s declaration laying out details of the filing didn’t say how many injury claims the company may face.
The case is 4E Brands Northamerica LLC, 22-50009, U.S. Bankruptcy Court, Southern District of Texas (Laredo).
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