A Chinese local court declared on Thursday the Sanlu Group at the heart of the country's milk contamination scandal goes bankrupt.

The Intermediate People's Court of Shijiazhuang, capital of the northern Hebei Province, accepted the bankruptcy petition for Sanlu, who faced a 1.1 billion yuan (US$161 million) debt, last December.

Sanlu stopped production on September 12, after its melamine-tainted baby milk powder was found to cause deaths and kidney stone for children.

It was fined last month 49.37 million yuan by the Shijiazhuang court, which also handed down life sentence to Sanlu's board chairwoman Tian Wenhua.

On December 19, the group borrowed 902 million yuan to pay the medical fees of children sickened by its melamine-tainted baby formula and to compensate the victims.

(Xinhua News Agency February 12, 2009)