Administrators lose Eurofood battle
The European Court of Justice (ECJ) ruled yesterday that the country in which a firm is located has jurisdiction in insolvency proceedings, even if the controlling company is based in another EU country.
This gives the Irish courts and the provisional liquidator, Pearse Farrell, power to wind up Eurofood. The Italian administrators and courts had refused to cooperate with him on the basis that Parmalat was an Italian company.
The ruling is a blow to Italian administrators, who had hoped to get documents from Eurofood that would support their $10 billion (€7.93bn) case for damages against Bank of America.
Parmalat, with operations in 30 countries worldwide, defaulted on payments of over €14bn last year and was discovered not to have a sum of €3.95bn it had claimed to have in a Bank of America account.
It set up and registered Eurofood in the Financial Services Centre in Dublin to provide finance facilities for Parmalat companies while Parmalat guaranteed its liabilities. Bank of America carried out day-to-day administration management.
In September 1998, Eurofood raised €149.6 million from Bank of America for companies in Venezuela and Brazil.
On January 27, 2004, just weeks after the parent company was taken into extraordinary administration in Italy, Bank of America petitioned the Irish courts to wind up Eurofood, which owed it over €2.9m.
However the Italian Court in mid-February put it under an Italian administrator, having refused to supply Mr Farrell with any of the documents he requested.
The Irish courts made an order winding up Eurofoods. The Italian administrator appealed to the Irish Supreme Court, which referred a number of questions to the ECJ.
