Judge Won't Cut New Parmalat From Suit

Parmalat can be sued by shareholders in a suit involving its predecessor company, Parmalat Finanziaria's collapse into bankruptcy in 2003, a judge ruled.

In an opinion Thursday, U.S. District Judge Lewis A. Kaplan declined to dismiss Parmalat SpA, which he referred to as "New Parmalat," from the third amended complaint in the case, which is seeking class-action status.

"New Parmalat assumed 'all debts' of the sixteen participating foreign debtors," Kaplan said. "It undertook also to discharge those debts -- including court-verified pre-insolvency claims by unsecured creditors -- by issuing stock in accordance with the Concordato's recovery ratios. New Parmalat therefore expressly agreed to assume Old Parmalat's liability, if any, for the fraud alleged in the (third amended complaint)."

Parmalat Finanziaria, an Italian dairy company, collapsed in 2003 under billions of dollars in debt following an accounting scandal.

In 2005, a restructuring plan -- known as a Concordato -- was approved. It created New Parmalat as a vehicle to enable the continued operations of certain foreign debtors, while creating a vehicle that could be used to discharge the claims of unsecured creditors once their claims have been validated.

Shareholders in the old entity filed a third amended complaint in the U.S. last July to add claims against New Parmalat.

In a statement on Monday, Parmalat said it took issue of the federal court decision and said it has filed an appeal.

"According to the district court, Parmalat SpA has stepped into the shoes of Parmalat SpA in extraordinary administration as its successor and, as such, has allegedly assumed, besides the assets, 'all debt,'" the company statement said. "This construction is not consistent with the 'composition of creditors' as approved by the Parma (Italy) court, and with the opinions of other Italian courts," it said

Enrico Bondi, New Parmalat's chief executive, and shareholders separately filed lawsuits in Italy and in the U.S. seeking to recover damages from Parmalat Finanziaria SpA's auditors and bankers, whom they claim were complicit in the accounting fraud. They include Bank of America Corp., Citigroup Inc. and Grant Thornton LLP.

Two Italian unit of Deloitte & Touche Tohmatsu International that served as auditors to the old entity agreed to a $149 million settlement in January.