In 2003, multinational Italian dairy and food corporation Parmalat collapsed with a €14 billion ($20bn; £13bn) hole in its accounts, in what remains Europe's biggest bankruptcy. The Parmalat bankruptcy greatly affected football team AC Parma, in which Parmalat was the major shareholder.[1]
2003
December 2003
December 19 – Bank of America states that Parmalat does not hold nearly $5B in liquid assets for the company as Parmalat reported in September 2003. Bank of America disavows the document released by Parmalat's Bonlat Financing Corp unit claiming over €4B are being stored by an affiliate of the company in the Cayman Islands. The bank promptly notifies Grant Thornton that no such account exists. The Milan Stock Exchange halts trading of Parmalat shares.[2]
December 23 – Bank of America lawyers claim the document proclaiming Bank of America holds Parmalat assets is a forgery.[3]
December 24 – Parmalat files bankruptcy. S&P rates Bank of America's exposure as "significant, but manageable". Investigators put Parmalat's debts as high as $12.8B.
2004
January 2004
January 12 – Luca Sala, former head of Bank of America's Italian corporate finance division, denies wrongdoing and maintains that he did not aid Parmalat executives in sustaining the price of Parmalat securities despite knowing the state of its finances. Prosecutors believe the executives constructed a series of shell companies and used forged documents to conceal losses and divert cash. Sala was linked to a $500M Parmalat bond issued by Bank of America and other banks.[5]
January 26 – Hoefer & Arnet stock analyst Dick Bove rates Bank of America's stock as a strong buy, but warns that "very disturbing signs are emerging that Bank of America’s internal discipline has broken down". He believes that the bank's estimated $274M exposure to the scandal, $244 million of which is locked in loans and letters of credit,[6] could have been prevented.[7]
January 29 – Bank of America files a petition to close the Irish financing unit of Parmalat, known as Eurofood IFSC Ltd. "to protect its interests as a creditor to Eurofood". Bank of America is owed more than $3.5M by Eurofood at this time.
2005
January 2005
January 25 – An Italian court bars Bank of America from claiming damages resulting from Parmalat's bankruptcy. The bank may still file as a damaged civil party if a future trial occurs.[20]
July 2005
July 14 – The $8B class-action lawsuit brought in Manhattan federal court on behalf of Parmalat investors is dismissed. Judge Lewis Kaplan's 74-page decision asserts that Bank of America did not know Parmalat was in financial trouble and thus could not profit off the company's downturn. The judge did not dismiss claims included in the suit against Citigroup, Banca Nazionale del Lavoro SpA, or Credit Suisse First Boston.[21]
August 2005
2006
February 2006
February 10 – After amending the lawsuit brought by Parmalat investors against former auditors and banks of the bankrupt company, Judge Lewis Kaplan gives the OK for Bank of America to be sued for its role in helping Parmalat commit securities fraud. The suit centers around a $300M loan made to Parmalat's Brazilian subsidiary and a 2001 change to an insurance policy for Parmalat Venezuela. Bank of America states that it "believed it was dealing with a strong, honest, and profitable company and had no knowledge of the fraud perpetrated by Parmalat and its senior management".[27]
March 2006
March 30 – Judge Lewis Kaplan of the Southern District of New York has ruled Bank of America may seek up to $1B in damages from Parmalat. The ruling allows Bank of America to claim Parmalat committed fraud, misrepresentation, conspiracy, and other illegal acts.[28]
2007
March 2007
March 26 – Some of the counterclaims brought by Bank of America against Parmalat, including racketeering and North Carolina deceptive-trade practices laws are dismissed by Judge Lewis Kaplan in New York federal district court. "Bank of America’s counterclaims for fraud, negligent misrepresentation, securities fraud, and civil conspiracy…will go forward", stated Bank of America spokesman Timothy Gilles, "…and they are significantly more important than the secondary claims that were dismissed."[29]
June 2007
June 22 – U.S. Federal Bankruptcy Court in New York grants a permanent injunction against claims by creditors, including Bank of America. It came as a defeat for bondholders and their $868M in claims. The injunction will not apply outside the U.S. or to any Parmalat affiliates or subsidiaries not restructuring under Italian bankruptcy law.[30]
June 25 – Bank of America representatives in Milan, Italy release a statement claiming the bank lost $450M from the Parmalat collapse.[31]
2009
January 2009
January 13 – Bank of America is acquitted in an Italian court of all charges drawn from activities prior to April 2002. There was not a law prior to this time which dictated the administrative responsibilities of a corporation. Charging Bank of America for actions (or lack thereof) prior to enactment of the law would thus be a case of ex post facto.[36]
July 2009
July 28 – Bank of America agrees to pay $100M to settle the original $10B lawsuit brought by Parmalat, its subsidiaries, and its investors. The settlement contains both a cash and non-cash component. Bank of America admitted no wrongdoing in settling the case.[37]
October 2009
October 2 – Bank of America provides settlement payment to Parmalat in the amount of US$98.5M.[38]
References
- Italian dairy boss gets 10 years BBC News, December 18, 2008, retrieved June 7, 2020^
- BofA disavows Parmalat document on finances Charlotte Business Journal, December 19, 2003, retrieved June 7, 2020^
- BofA claims fraud in Parmalat case Charlotte Business Journal, December 23, 2003, retrieved June 7, 2020