"This bankruptcy order is not a surprise to us," he said. "We were aware that Sanlu was in a very difficult situation and faced mounting debts as a result of the melamine contamination crisis."

Thousands affected

Sanlu baby formula was among the top brands hit by the scandal [Reuters]
Sanlu was the biggest name among some 22 Chinese dairy companies found to have added high levels of the industrial chemical melamine to its milk products.

The chemical was added to fool tests for protein levels and cover up diluted milk.
 
The scandal led to the deaths of at least six babies and caused 294,000 others across China to suffer urinary problems.
 
It also led to the recall of thousands of Chinese-made milk products, both in China and around the world.

At least a dozen individual lawsuits have been filed against part state-owned Sanlu, but they are caught in a legal limbo as courts have neither accepted nor refused the cases.

The Chinese government has promised free medical treatment for children who fell ill as a result of being fed the tainted milk, plus unspecified compensation.

Earlier this month China's health ministry said that some Chinese dairy companies would likely have to pay for a compensation plan, the details of which have not been released.