US judge directs financial institutions to settle with Parmalat

US judge directs financial institutions to settle with Parmalat

[JURIST] Judge Lewis A. Kaplan of the US District Court for the Southern District of New York [official website] has asked that the financial institutions being sued by and counter-suing bankrupt Italian dairy giant Parmalat SpA [corporate website; JURIST news archive] negotiate a settlement with the company and has adjourned discovery proceedings until December 31st, Parmalat announced [press release, PDF] Wednesday. Parmalat’s stock rose by 4.8 percent to 3.04 euros ($3.90) on the Milan Stock Exchange following the news.

Parmalat filed for insolvency in December 2003, with about $17.3 billion of debt, after realizing there was a massive $4.9 billion discrepancy in its books. It later initiated suits against various group both in the US and Italy, including Bank of America [corporate website; JURIST report] and Citigroup [corporate website; JURIST report], as well its former auditors [press release, PDF] for their roles in the company’s economic collapse. Bank of America has pursued a counterclaim [JURIST report] charging Parmalat and its former management with fraud, misrepresentation, conspiracy and other illegal acts, and allege that the lawsuit is simply trying to shift the blame from the culprit to the victims of the fraud. AP has more.