Citigroup fights back in Parmalat affair

The bank initiated the challenge against the Italian governmental authorities responsible for the Parmalat restructuring, led by the court-appointed administrator, Enrico Bondi, arguing that the proposed restructuring, as approved by the authorities, 'violates the rights of Citigroup and other creditors and investors.' The bank said Italy's government, which oversees Parmalat's administration, had 'failed to ensure a fair process for considering claims' relating to the €14 billion ($17.2 billion) insolvency. William Mills, CEO of Citigroup's global corporate and investment bank for Europe, Middle East and Africa, commented: "The law requires that all creditors be treated equally during bankruptcy proceedings, and instead the rights of creditors have been trampledupon repeatedly." In July, Parmalat's administrators sued Citigroup for $10 billion (€8.06bn) in damages over its dealings with the company before it went bankrupt. A Financial Times report this week explains that at stake is Citigroup's eligibility to swap debt for equity in the new Parmalat group next year, a centrepiece of Mr Bondi's programme to manage the group's €14.2bn debt pile. As the largest creditor, Citigroup could become a significant shareholder. Citigroup claims that Bondi's decision to accept or reject creditors fails to uphold the right of all creditors to be treated equally. "We believe that the plan, as approved, does not respect this fundamental principle," said Mills, chief executive of Citigroup's global corporate and investment bank for Europe, the Middle East and Africa. 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, he added. In August, Parmalat issued a list of recognised creditors that rejected about €4bn out of €11.6bn in claims, including all but €2m of Citigroup's €538m in Parmalat debt.

Citigroup fights back in Parmalat affair

Citigroup, the world's largest financial services group, hits back at the €14 billion debt-ridden Italian dairy group Parmalat, igniting a legal challenge against the administrators on Friday.

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