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Mon, Feb 23, 2004 - Page 12 News List

Parmalat creditors face off


A group of Parmalat Finanziaria SpA investors are challenging Italy's new bankruptcy law to ensure bondholders get a say in the debt-repayment plans of Italy's largest dairy company.

The group of institutional investors, pension funds and private companies invested a combined 300 million euros (US$376 million) in Parmalat bonds. They filed a suit with a Rome administrative court to wrest influence from Industry Minister Antonio Marzano and Enrico Bondi, Parmalat's government-appointed bankruptcy administrator, in favor of a bankruptcy court.

Italy issued an emergency decree in December, changing the nation's bankruptcy laws to speed a restructuring of the maker of Kyr yogurts and Santal juices. Bondholders have said the bankruptcy procedure, which is overseen by the industry ministry, gives excessive influence to the government and creditor banks.

"This is a battle to make sure that internationally agreed treatment for all investors is recognized," said Umberto Mosetti, a professor of governance at the University of Siena and chief executive in Italy for Brussels-based investor advocacy group Deminor, in a telephone interview.

Deminor is advising the bondholder group on its court action, Mosetti said. The suit was filed on behalf of two French construction companies by Adolfo Di Majo of law firm DMP and a professor of civil law at Rome University, Mosetti said.

Lawyers for US creditors this month met with Marzano and other government officials to push for a US-style creditor committee to be included in the bankruptcy proceedings. Marzano is setting up a nine-member committee that will include the four foreign and four Italian banks with the most risk from Parmalat.

The ninth member will represent bondholders. More than 75,000 Italian investors own Parmalat bonds.

Marzano did not say whether creditors would have access to internal Parmalat documents and have a role in shaping any debt-repayment plan as they can in the US, or whether they would only be called on to advise Parmalat managers.

Bondholder representatives including Evan Flaschen, a partner at US law firm Bingham McCutchen, which is representing a group of 160 bondholders who own US$3.5 billion of Parmalat debt, said the committee didn't sufficiently represent bondholders.

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