A Chinese court has accepted a bankruptcy application from Sanlu Group which was at the center of a tainted milk scandal and is facing huge debts, an official said on Thursday.

Wang Jianguo, spokesman for the Shijiazhuang city government of Hebei Province, said the Intermediate People's Court of Shijiazhuang City had accepted the application by the Heipingxi Road branch of Shijiazhuang City Commercial Bank - a creditor of Sanlu.

Sanlu Group now faced 1.1 billion yuan (US$160 million) of net debts, Xiang said at a press conference.

As of October 31, financial auditing and assets appraisal showed the group's total assets were worth 1.56 billion yuan while its total debts were 1.76 billion yuan, the spokesman said.

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

Sanlu products were found to contain melamine, which was being used to increase the apparent protein content in milk. The use of the industrial chemical is restricted in food.

Children can develop kidney stones after drinking such milk.

The scandal surfaced in September. Some other dairies' products were also found to contain the chemical. The Ministry of Health has said it was likely the contamination killed six babies. Another 294,000 infants suffered from urinary problems such as kidney stones.

(Xinhua News Agency December 25, 2008)