A New York court has ruled that Italian dairy group Parmalat can be sued by shareholders in its predecessor over the collapse of the company in 2003.
The District Court for the Southern District of New York issued an opinion denying the motion of Parmalat, described by Judge Lewis A. Kaplan as “new Parmalat”, to dismiss claims asserted against it in a putative class action which has been brought before the court.
“New Parmalat assumed ‘all debts’ of the sixteen participating foreign debtors,” the judge 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 (restructuring plan) recovery ratios. New Parmalat therefore expressly agreed to assume Old Parmalat’s liability, if any, for the fraud alleged in the (third amended complaint).”
The company’s predecessor, Parmalat Finanziaria SpA, collapsed in 2003, owing billions of dollars following an accounting scandal. The company was relaunched in 2005 following a restructuring plan, known as the Concordato.
Parmalat took issue with the judge’s ruling, and has given notice of its intention to appeal.
The company said: “According to the district court, Parmalat SpA (Assumptor) 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’. This construction is not consistent with the ‘Composition with creditors’, as approved by the Parma court, and with the opinions of other Italian courts.”
Parmalat added that the court has clarified that the potential claims of the “class”, if recognised, must be enforced in Italy and would be subject to the appropriate “recovery ratios”.
Shareholders in the former company filed a third amended complaint in the US in July 2006, adding claims against the new Parmalat company.