Food group Parmalat was poised to file for bankruptcy protection on Wednesday in an effort to survive a 7 billion-euro (US$8.7 billion) hole in its accounts that has turned into one of Europe's biggest corporate crises.
As two teams of investigators prepared to coordinate their fraud probes, Parmalat's rescue managers awaited publication of a new government decree introducing a fast-track procedure for big Italian companies seeking protection from creditors.
Once published, the company will rush ahead and file for immediate protection, probably yesterday, sources close to Parmalat said.
"The decree will provide the company with immediate protection while it assembles a plan to restructure the group and resolve its financial difficulties," one of the sources told reporters.
About 20 people have so far been named in the case including Parmalat's founder Calisto Tanzi, who opened his first milk plant in 1961 then built one of Italy's best-known multinationals, which now employs 35,000 people in 30 countries.
Prosecutors said they were making swift progress in working out how a company that had 4.2 billion euros in liquidity on its balance sheet in fact was so short of cash it had run up a 120 million-euro bill for unpaid milk from Italian farmers.
Among the people questioned some said any irregularities had been to protect the company and shield losses, and not for personal gain, a judicial source said.
Parmalat's new chairman and CEO Enrico Bondi, a well-known Italian turnaround specialist, was expected to be made a government-appointed commissioner once the decree was published.
Bondi would be given powers to restructure the dairy group, with the authorisation, subject to approval by the Industry Ministry, to sell assets to save core operations, according to a copy of the decree printed by Il Sole 24 Ore newspaper.
Parmalat had a stock market value of 1.8 billion euros before the crisis broke, but its shares are now almost worthless and its bonds are trading at barely 20 percent of face value.
The Parmalat scandal has stoked a debate over Italy's regulatory structure, with critics of Bank of Italy Governor Antonio Fazio saying the central bank failed to spot mounting problems at Italy's eighth-largest industrial concern.
But others say the entire supervisory system, split among agencies, should be centralized in one authority. Fazio told La Repubblica newspaper that rumors he might resign over Parmalat were false.
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