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Bank Of America, Deloitte And Grant Thornton Facing New Parmalat Lawsuits

by Amanda Banks, for LawAndTax-News.com, London

29 November 2005


It emerged on Friday that Food Holdings Limited, Dairy Holdings Limited, and Parmalat Capital Finance Limited - three Cayman Islands companies, presently in liquidation, that suffered substantial losses related to the collapse of Parmalat - have sued Parmalat's principal banker and auditors, alleging a myriad of financial improprieties, including fraud, negligent misrepresentation, and breach of fiduciary duty.

The suits, in the US District Court for the Southern District of New York and the Superior Court in Mecklenburg County, North Carolina, were filed at the insistence of the liquidators of the Cayman companies, which are trying to reclaim the losses they suffered as a result of financial impropriety relating to the Italian food and milk processing giant, prior to its collapse in 2003. Together, the two lawsuits seek close to $1 billion for the companies.

"We believe these are very strong claims," Allan Diamond, senior partner of Diamond McCarthy Taylor Finley & Lee LLP, US Counsel to the liquidators, announced, continuing:

"As parties who clearly participated, and knowingly assisted, in much of the wrongdoing, these defendants will be held accountable."

The lawsuits allege that Bank of America and its subsidiaries were intimately involved in the financial improprieties, and worked with Parmalat insiders to orchestrate a series of financial transactions designed to conceal Parmalat's insolvency, while generating millions of dollars in fees and interest for the bank. The lawsuits also make allegations of negligence and fraud against the former auditors of Parmalat, Deloitte Touche Tohmatsu and Grant Thornton.

"We want to see the money go directly back to the Cayman companies, and ultimately to the creditors of those estates, as would be the case in any normal insolvency," Guy Locke, Head of Insolvency and Restructuring at Walkers, Cayman attorneys to the liquidators said, adding that:"We are confident in our claims and look forward to the decision of the court."

The New York lawsuit brought by Food Holdings Limited and Dairy Holdings Limited names Bank of America Corporation, Banc of America Securities, LLC, Bank of America, NA, and certain other Bank of America entities; (ii) Deloitte Touche Tohmatsu, Deloitte & Touche SpA, Deloitte & Touche Tohmatsu Auditores Indipendentes (Brazil), and certain other Deloitte entities; and (iii) Grant Thornton International, Grant Thornton SpA, and certain other Grant Thornton entities.

The allegations include: fraud, negligent misrepresentation, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, breach of contract, unjust enrichment, civil conspiracy, and declaratory judgment.

In the North Carolina lawsuit, Parmalat Capital Finance Limited names Bank of America Corporation, Bank of America National Trust & Savings Association, Banc of America Securities, LLC, Banc of America Securities, Ltd., Bank of America International Ltd. and Bank of America, NA. It alleges breach of fiduciary duty, aiding and abetting breach of fiduciary duty, unjust enrichment, and unlawful civil conspiracy.

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