Parmalat collapse sparks legal row

COMPANIES owed tens of millions of euro by failed Italian food company Parmalat are fighting to decide if the Irish or Italian courts have jurisdiction in the case.

The legal tussle between creditors and Parmalat over an Irish subsidiary is likely to see an appeal in the Dublin courts, a lawyer representing Irish liquidators has said.

Since Parmalat filed for insolvency at the end of last year, its government-appointed administrator Enrico Bondi has tried to keep control of the group by stopping creditors appointing separate liquidators.

But last week, the Dublin High Court supported creditors by confirming their appointment of local liquidators of Irish subsidiary Eurofood, challenging the appointment by the Parma court of Bondi last month. Creditors see potential benefits in appointing their own liquidator a decision which a court must approve to oversee their interests first.

"Both parties have been victorious in their own jurisdictions, Eurofood creditors in Ireland and Parmalat in Italy," said Paolo Criscione, managing partner of Lovells in Milan, advising Pearse Farrell of Farrell Grant Sparks, appointed as first provisional and now official liquidators in Dublin.

The appointment of one liquidator for Eurofood must now be approved in both courts in order to resolve the conflict.

Last Friday, the Irish liquidator appealed in the Parma courts against the Italian insolvency filing, and Bondi is likewise expected to appeal in the Dublin court, said Criscione.

Bank of America is leading creditors, which include bondholders owed $122 million by Eurofood, and initiated the Eurofood insolvency filing in the High Court on January 27.

In February, the Parma courts decided in favour of Parmalat that the group should be placed into Italian insolvency proceedings.

But last week the Dublin court upheld the Irish jurisdiction, contradicting the finding of the Parma court.

The administrator has tried to keep control of the global group as a far as possible, saying that this approach will offer best value for creditors as a whole.

Earlier, Parmalat lost its attempt to keep control of its Cayman Islands assets.