Parmalat must defend US investor class-action suit

Class Action News

A Manhattan federal judge has rejected Parmalat SpA's (PLT.MI: Quote, Profile , Research) request to dismiss an investor class-action lawsuit stemming from the company's December 2003 collapse in an accounting scandal.

The ruling is a defeat for the Italian dairy company and Chief Executive Enrico Bondi. Both have been trying to distance themselves from prior management, and are seeking billions of dollars of damages from the company's former bankers.

Parmalat had filed Europe's largest bankruptcy under about 14 billion euros ($19.07 billion) of debt, after uncovering a 4 billion euro ($5.45 billion) hole in its accounts.


In a June 28 ruling, U.S. District Judge Lewis Kaplan concluded that the reorganized Parmalat "expressly agreed" when it emerged from insolvency proceedings in 2005 to assume the old Parmalat's liabilities for fraud alleged by the investors.

"New Parmalat asserts that it did not assume the pre-insolvency acts," Kaplan wrote in a 30-page opinion. "But the issue is not the assumption of acts. It is the assumption of liability for those acts."

Kaplan also rejected Bondi's contention that the investors waited too long after learning of the alleged fraud to file claims, saying procedural developments in the case pushed back the filing deadline.

Stuart Grant, a lawyer for the plaintiffs, in a statement said Kaplan's decision paves the way for a "substantial recovery" against Parmalat. 

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