The Chinese company at the centre of a scandal over tainted baby milk formula, and now made bankrupt, has some €208 million in debt, according to the state media.

The Beijing News and the semi-official China News Service said China's Sanlu Group owed around €208 million in redundancy payments to employees and various suppliers and sales agents.

New Zealand dairy export giant Fonterra Cooperative Group Ltd said that Sanlu, in which Fonterra has a 43 per cent shareholding, would sell its assets to pay creditors.

Fonterra has completely written off its €81 million investment in Sanlu.

The Beijing News said more than 1,000 creditors had gone to Sanlu's headquarters in the northern city of Shijiazhuang to discuss how money owed to them would be paid.

Sanlu admitted in September that it had sold milk powder tainted with melamine, an industrial compound, causing kidney stones and other complications in children.

Chinese authorities said at least six children died and around 290,000 were made ill by the milk formula.

The melamine scandal battered faith in Chinese-made products, following a four-month campaign to bolster the country's food safety regime in the wake of a raft of quality scandals last year.