BEIJING - A Chinese court plans to auction off the assets of the Chinese dairy at the heart of a tainted milk scandal that sickened hundreds of thousands of children and was blamed for killing six, reports said Saturday.

Sanlu Group Co. was declared bankrupt by a court in its north China base of Shijiazhuang on Thursday. Its real estate holdings, buildings and equipment will be auctioned March 4, along with its investment rights and interests in three other dairy companies, newspapers and the official Xinhua News Agency reported.

Fonterra, a New Zealand farmer-owned cooperative that owns 43 per cent of Sanlu, has already written off its US $139 million investment. Fonterra was responsible for alerting Chinese authorities about the tainted milk scandal last August.

Sanlu was one of 22 Chinese dairy companies whose products were found to contain high levels of the industrial chemical melamine, which led to the deaths of six babies and caused 294,000 others to suffer urinary problems, according to the government.

At least a dozen lawsuits have been filed against state-owned Sanlu, but they are caught in a legal limbo as courts have neither accepted nor refused the cases - a sign of the scandal's political sensitivity.

The scandal highlighted a widespread practice among dairy suppliers of watering down milk they bought from farmers and then adding melamine to it to artificially boost its apparent protein levels. The tainted milk was then sold to dairy companies.

Courts have sentenced more than 20 people for adulterating milk or failing to respond to the tainting, including Sanlu's former general manager and chairwoman Tian Wenhua, who was given a life sentence. Tian, 66, has appealed.