Parmalat bankruptcy timeline

2003

December 2003

December 19 - Bank of America states 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. [cite news
title = BofA disavows Parmalat document on finances
publisher = Charlotte Business Journal
date = 2003-12-19
url = http://charlotte.bizjournals.com/charlotte/stories/2003/12/15/daily52.html
accessdate = 2007-07-22 ]
December 23 - Bank of America lawyers claim the document proclaiming Bank of America holds Parmalat assets is a forgery. [cite news
title = BofA claims fraud in Parmalat case
publisher = Charlotte Business Journal
date = 2003-12-23
url = http://charlotte.bizjournals.com/charlotte/stories/2003/12/22/daily14.html
accessdate = 2007-07-22 ]
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. [cite news
title = Italian bankruptcy involves BofA
publisher = Charlotte Business Journal
date = 2003-12-24
url = http://charlotte.bizjournals.com/charlotte/stories/2003/12/22/daily25.html
accessdate = 2007-07-22 ]

2004

January 2004

January 12 - Luca Sala, former head of the 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. [cite news
title = Former BofA exec denies wrongdoing
publisher = Charlotte Business Journal
date = 2004-01-12
url = http://charlotte.bizjournals.com/charlotte/stories/2004/01/12/daily2.html
accessdate = 2007-07-22 ]
January 26 - Hoefer & Arnet stock analyst Dick Bove rates Bank of America’s stock as a strong buy, but warned that “very disburbing 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 [cite news
title = BofA exposure to Parmalat totals $274M
publisher = Charlotte Business Journal
date = 2004-01-15
url = http://charlotte.bizjournals.com/charlotte/stories/2004/01/12/daily42.html
accessdate = 2007-07-22 ] , could have been prevented. [cite news
title = New investment bank uptown eyes its first acquisition
publisher = Charlotte Business Journal
date = 2004-01-26
url = http://charlotte.bizjournals.com/charlotte/stories/2004/01/26/newscolumn1.html
accessdate = 2007-07-22 ]
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. [cite news
title = BofA seeks to close Irish Parmalat unit
publisher = Charlotte Business Journal
date = 2004-01-29
url = http://charlotte.bizjournals.com/charlotte/stories/2004/01/26/daily35.html
accessdate = 2007-07-22 ]

February 2004

February 24 - For the first time Bank of America, along with Citigroup, Morgan Stanley, Deutsche Bank, UBS AG, and several Italian banks, becomes a formal target of the Italian investigation surrounding the Parmalat bankruptcy. [cite news
title = Report: BofA in formal investigation
publisher = Charlotte Business Journal
date = 2004-02-24
url = http://charlotte.bizjournals.com/charlotte/stories/2004/02/09/daily11.html
accessdate = 2007-07-22 ]
February 24 - Three of Parmalat’s U.S. affiliates, Parmalat USA Corp., Farmland Dairies, and Milk Products of Alabama, file for bankruptcy protection with combined assets of $414.4M and combined debt of #316.5M. [cite news
title = SEC, Parmalat prosecutors meet in Italy
publisher = Charlotte Business Journal
date = 2004-02-24
url = http://charlotte.bizjournals.com/charlotte/stories/2004/02/23/daily16.html
accessdate = 2007-07-22 ]
February 27 - Luca Sala admits to and offers to forfeit most of the $27M he misappropriated in a kickback scheme at Parmalat, but still maintains the bank was unaware of his improprieties. The SEC travels to Italy to assist Italian officials in deciphering American involvement in the collapse of Parmalat. [cite news
title = Report: Ex-BofA exec admits kickbacks
publisher = Charlotte Business Journal
date = 2004-02-27
url = http://charlotte.bizjournals.com/charlotte/stories/2004/02/23/daily59.html
accessdate = 2007-07-22 ]

March 2004

March 5 - Parmalat seeks $618M from U.S. banks in order to recover asets from creditors under an Italian claw-back law known as “revocatoria”. This law enables insolvent companies to seize assets counterparts received during transaction with them, usually back as much as five years. At this point, Parmalat’s debt is believed to be upwards of $17B. [cite news
title = Parmalat seeks millions from U.S banks
publisher = Charlotte Business Journal
date = 2004-03-05
url = http://charlotte.bizjournals.com/charlotte/stories/2004/03/01/daily57.html
accessdate = 2007-07-22 ]
March 18 - An Italian judge is asked by prosecutors to order 29 executives and three companies to stand trial on four separate charges. Three executives from Bank of America, Luca Sala, Luis Moncada, and Antonio Luzi, are included in the order. In addition to Bank of America, the Italian affiliates of Deloitte & Touche and Grant Thornton are also ordered to court. Prosecutors believe Bank of America should have been aware of the financial problems at Parmalat when it issued €1.2B, or nearly $1.5B, in its bonds over the past seven years. [cite news
title = Italian prosecutors want BofA to stand trial
publisher = Charlotte Business Journal
date = 2004-03-18
url = http://charlotte.bizjournals.com/charlotte/stories/2004/03/15/daily36.html
accessdate = 2007-07-22 ] A fast-track trial was sought, but an Italian court denied expediting proceedings. [cite news
title = No fast-track trial for Parmalat case
publisher = Charlotte Business Journal
date = 2004-03-24
url = http://charlotte.bizjournals.com/charlotte/stories/2004/03/22/daily22.html
accessdate = 2007-07-22 ]

May 2004

May 24 - Creditors file a $10B class-action lawsuit against former auditors and banks of Parmalat in the U.S. District Court in Manhattan. Charges include “fraudulent activity and giving misleading information”. Hermes, a British pension fund holding more than 2% of Parmalat shares, and Deminor, a European shareholder rights group representing Parmalat bondholders, headed the suit. [cite news
title = Parmalat creditors file suit against BofA, others
publisher = Charlotte Business Journal
date = 2004-05-24
url = http://charlotte.bizjournals.com/charlotte/stories/2004/05/24/daily9.html
accessdate = 2007-07-22 ]

October 2004

October 7 - Parmalat sues Bank of America for $10B in damages, as it had in July 2004 against Citigroup and in August 2004 against Deloitte & Touche and Grant Thornton. [cite news
title = Parmalat sues BofA
publisher = Charlotte Business Journal
date = 2004-10-07
url = http://charlotte.bizjournals.com/charlotte/stories/2004/10/04/daily40.html
accessdate = 2007-07-22 ]
October 19 - Parmalat investors name Bank of America as a defendant in an $8B class-action suit in New York. A previous class-action suit filed on behalf of Parmalat investors was joined into this new suit. [cite news
title = BofA named in new Parmalat suit
publisher = Charlotte Business Journal
date = 2004-10-19
url = http://charlotte.bizjournals.com/charlotte/stories/2004/10/18/daily23.html
accessdate = 2007-07-22 ]
October 29 - Bank of America asks an Italian court to include itself as a co-plaintiff in the case against 32 executives, auditors, and lenders in a Milan courtroom, despite the ongoing investigation into Bank of America’s involvement in the Parmalat collapse. Bank of America denies any wrongdoing in the matter and is considering filing its own countersuit against Parmalat. [cite news
title = BofA seeks plaintiff status in Parmalat case
publisher = Charlotte Business Journal
date = 2004-10-29
url = http://charlotte.bizjournals.com/charlotte/stories/2004/10/25/daily45.html
accessdate = 2007-07-22 ]

December 2004

December 17 - Bank of America, still being sued for a combined $18B by Parmalat and its investors, is named as one of Parmalat’s creditors to the tune of $163M. This means Bank of America can take part, as all creditors can, in a debt-for-equity swap under Parmalat’s restructuring plan. This makes Bank of America a shareholder in the company when it emerges from bankruptcy. [cite news
title = Parmalat judge rules in BofA's favor
publisher = Charlotte Business Journal
date = 2004-12-17
url = http://charlotte.bizjournals.com/charlotte/stories/2004/12/13/daily44.html
accessdate = 2007-07-22 ]

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. [cite news
title = Italian court tosses BofA's Parmalat damage claim
publisher = Charlotte Business Journal
date = 2005-01-25
url = http://charlotte.bizjournals.com/charlotte/stories/2005/01/24/daily12.html
accessdate = 2007-07-22 ]

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. [cite news
title = Parmalat suit vs. BofA dismissed
publisher = Charlotte Business Journal
date = 2005-07-14
url = http://charlotte.bizjournals.com/charlotte/stories/2005/07/11/daily38.html
accessdate = 2007-07-22 ]

August 2005

August 2 - Luca Sala is arrested by Italian authorities for his involvement in the bankruptcy when he was head of Bank of America’s Italian corporate banking division and after he became a consultant at Parmalat in 2003. [cite news
title = Report: Italian police arrest ex-BofA exec
publisher = Charlotte Business Journal
date = 2005-08-02
url = http://charlotte.bizjournals.com/charlotte/stories/2005/08/01/daily20.html
accessdate = 2007-07-22 ]
August 9 - A U.S. judge rules Parmalat can proceed with its $10B suit against Bank of America on charges of aiding & abetting break of fiduciary duty and looting of the company. The suit was propelled forward despite Bank of America’s protest that a company cannot be sued for fraud by the company perpetrating the fraud in question. Judge Lewis Kaplan dismissed the protest because the precedent called into question was an application of New York law. [cite news
title = Judge gives OK for Parmalat to sue BofA
publisher = Charlotte Business Journal
date = 2005-08-09
url = http://charlotte.bizjournals.com/charlotte/stories/2005/08/08/daily15.html
accessdate = 2007-07-22 ]
August 18 - After 16 days, Luca Sala is released from pre-trial custody in Italy after it was determined that he could no longer tamper with evidence. The current charges against him stem from $63.5M in siphoned funds from Parmalat to private accounts. Sala denies stealing the money, instead claiming he earned some of it in commissions from insurance and private-placement contracts he handled for Parmalat. [cite news
title = Report: Ex-BofA exec released from jail
publisher = Charlotte Business Journal
date = 2005-08-18
url = http://charlotte.bizjournals.com/charlotte/stories/2005/08/15/daily34.html
accessdate = 2007-07-22 ]

November 2005

November 28 - Three Cayman Islands-based companies sue Bank of America for its role in the collapse of Parmalat. Charges include financial improprieties including fraud, negligent misrepresentation, & breach of fiduciary duty. The suit claims Bank of America generated millions of dollars in fees and interest when it orchestrated financial transactions designed to disguise Parmalat’s insolvency. The claim seeks nearly $1B from Bank of America, Deloitte Touche Tohmatsu & Grant Thornton. [cite news
title = Cayman Island firms sue BofA
publisher = Charlotte Business Journal
date = 2005-11-28
url = http://charlotte.bizjournals.com/charlotte/stories/2005/11/28/daily6.html
accessdate = 2007-07-22 ]

December 2005

December 20 - Bank of America is granted the ability to join other plaintiffs in an Italian lawsuit against Parmalat. This is possible due to the condition that Bank of America is entitled to treatment as a damaged party in any civil suit as set forth on 2005-01-25. [cite news
title = BofA allowed to sue Parmalat in Italy
publisher = Charlotte Business Journal
date = 2005-12-20
url = http://charlotte.bizjournals.com/charlotte/stories/2005/12/19/daily14.html
accessdate = 2007-07-22 ]

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”. [cite news
title = Parmalat investors allowed to press BofA suit
publisher = Charlotte Business Journal
date = 2006-02-10
url = http://charlotte.bizjournals.com/charlotte/stories/2006/02/06/daily50.html
accessdate = 2007-07-22 ]

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. [cite news
title = BofA to file claims against Parmalat
publisher = Charlotte Business Journal
date = 2006-03-30
url = http://charlotte.bizjournals.com/charlotte/stories/2006/03/27/daily43.html
accessdate = 2007-07-22 ]

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.” [cite news
title = BofA loses round in Parmalat suit
publisher = Charlotte Business Journal
date = 2007-03-26
url = http://charlotte.bizjournals.com/charlotte/stories/2007/03/26/daily1.html
accessdate = 2007-07-22 ]

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. [cite news
title = Parmalat wins injunction vs. BofA claims
publisher = Charlotte Business Journal
date = 2007-06-22
url = http://charlotte.bizjournals.com/charlotte/stories/2007/06/18/daily52.html
accessdate = 2007-07-22 ]
June 25 - Bank of America representatives in Milan, Italy release a statement claiming the bank lost $450M from the Parmalat collapse. [cite news
title = Report: BofA loses $450M on Parmalat
publisher = Charlotte Business Journal
date = 2007-06-25
url = http://charlotte.bizjournals.com/charlotte/stories/2007/06/25/daily5.html
accessdate = 2007-07-22 ]

July 2007

July 6 - An Italian judge ordered Bank of America, Citigroup, Morgan Stanley, Deutsche Bank, and UBS AG to stand trial in January 2008. The specific charges against Bank of America are in connection with an Italian law through which a company can be charged for not having proper governance controls in place to prevent illegal actions by employees. Specifically, Bank of America’s accountability is held to its inability to prevent three former employees from market rigging. [cite news
title = BofA ordered to stand trial over Parmalat
publisher = Charlotte Business Journal
date = 2007-07-06
url = http://charlotte.bizjournals.com/charlotte/stories/2007/07/02/daily26.html
accessdate = 2007-07-22 ]
July 27 - A U.S. Federal bankruptcy judge in New York dismisses claims by foreign investors that the bank knew the Italian company was in financial dire straits and profited from that information. This decision effectively limits the lawsuits to Parmalat investors who reside in the United States. This verdict also is extensible to Citigroup Inc., Deloitte Touche Tohmatsu and Grant Thornton. The $10B suit brought by former Parmalat CEO Enrico Bondi is still being disputed at this time. [cite news
title = Report: Foreign investors can't sue BofA over Parmalat
publisher = Charlotte Business Journal
date = 2007-07-27
url = http://charlotte.bizjournals.com/charlotte/stories/2007/07/23/daily40.html?surround=lfn
accessdate = 2007-07-27 ]

August 2007

August 10 - U.S. District Judge Lewis Kaplan in New York dismisses suits against Bank of America, Credit Suisse, and Grant Thornton brought by two U.S. subsidiaries of Parmalat, Parmalat USA Corp and Farmland Dairies. This extends the former ruling against Parmalat to include its domestic subsidiaries. [cite news
title = Judge dismisses Parmalat complaints vs. BofA
publisher = Charlotte Business Journal
date = 2007-08-10
url = http://charlotte.bizjournals.com/charlotte/stories/2007/08/06/daily39.html?surround=lfn
accessdate = 2007-08-18 ]

References