Parmalat SpA, the Italian dairy group that went broke about four years back, has reached a deal for an out-of-court settlement with the Italian bank Intesa Sanpaolo. The private arrangement between the two companies, which was announced on Sunday, is worth 327 million Euros ($469.52 million).
The food group also reached simultaneous arrangements with Cariparma and Biberbanca (both are banking companies). These arrangements are worth 83 million Euros and 3 million Euros respectively. The out-of-court arrangements will mark the end of all lawsuits between the companies.
Parmalat had sued the banks for their alleged role in worsening its financial problems that eventually led to the group filing for bankruptcy protection in 2003. The charges were more specifically applicable to the use of credit to conceal company’s financial difficulties. The collapse of Parmalat and the associated companies under 14 billion Euros of debt was Europe’s biggest financial scandals at that time. It cost dear thousands of people who had invested in company’s bonds.
A joint statement issued by both the companies said that the settlement had brought to an end ‘all pending damages.’ The Italian bank also denied any wrongdoing and claimed that it was ‘totally unaware of the Parmalat state of insolvency.’ The settlement was:
...only to avoid uncertainties which arise, as a matter of fact, from the involvement in a long-lasting and very complex litigation while also considering the related heavy administrative costs.
Parmalat had returned to the Milan stock exchange a couple of years back after restructuring itself. Under the chairmanship of new CEO Enriqe Bondi, it has since been on a crusade to recover billions of Euros from banks in settlements and litigations. The recouping exercise has contributed fairly to the company’s coffers since then.
Early this year, the Italian dairy firm had reached similar settlements with Merryl Lynch, Italy’s Banca Monte Parma and Dutch bank ING. The latest settlement brings the total amount that Parmalat has settled to a staggering $1.73 billion. It still has pending recoveries against American companies Bank of America and Citigroup.
