Citigroup starts legal action against Parmalat restructuring, says creditors' rights ignored

New York, Oct. 8 - Citigroup said it has begun a legal challenge against the Italian governmental authorities responsible for Parmalat Finanziaria SpA's planned restructuring.

The New York financial services company said the proposed reorganization violates its rights and those of other creditors and investors.

In particular, Citigroup said "substantially all" of its "legitimate" claims have been rejected, with only €2.01 million out of €538.68 million of claims recognized on the provisional list of admitted creditors.

Other financial institutions have been treated similarly, Citigroup said.

"The law requires that all creditors be treated equally during bankruptcy proceedings, and instead the rights of creditors have been trampled upon repeatedly," said William J. Mills, chief executive officer of Citigroup's global corporate and investment bank for Europe, Middle East and Africa, in a news release.

"We believe that the plan, as approved, does not respect this fundamental principle and therefore undermines the goal of the administration and creates unnecessary legal and financial risk for New Parmalat.

"No one has come forward with any evidence of wrongdoing by Citigroup, or with any indication that Citigroup was aware of Parmalat's massive and sustained fraud.

"The proposed rejection of our claims in the Parmalat bankruptcy is unfair, entirely without basis and in our view contrary to the law. As Parmalat's largest creditor and a victim of this fraud, Citigroup will pursue all opportunities for appropriate redress of its losses."

Citigroup's action was filed with the Administrative Court of Lazio, Italy, and argues that the Ministry of Productive Activities and the Ministry of Agriculture and Forestry have failed to ensure a fair process for considering claims.

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