Comerica objects to Parmalat USA's debtor-in-possession financing

By Jeff Pines

Washington, March 11 - The bankruptcy court should reject Parmalat USA Corp.'s proposed debtor-in-possession financing because the company does not operate any businesses of its own, Comerica Bank said.

Parmalat owes Comerica $19.2 million plus interest and fees in the form of a master short-term borrowing agreement and a demand note. It also owes Comerica $758,319 more for reimbursement under a letter of credit.

Parmalat does own all of Farmland Dairies LLC, which owns 80% of Milk Products of Alabama LLC and the money will be used to fund its two subsidiaries. But since they also are in Chapter 11, it is unlikely Parmalat will get any distribution from them, Comerica said in a motion filed March 11 with the U.S. Bankruptcy Court for the District of Southern New York.

A final hearing on the company's $35 million in cash advances and credit is scheduled for March 12.

Parmalat filed for Chapter 11 on Feb. 24. Its Chapter 11 case number is 04-11139.

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