Bank of America looks set to win a legal dispute with Parmalat over a unit of the scandal-hit Italian dairy group after a ruling by the European Union's top court today.
The administrators who rescued Parmalat after its collapse in 2003 had wanted to oversee the liquidation of Irish subsidiary Eurofood to get documents that could bolster their $10 billion damages case against Bank of America.
But the European Court of Justice ruled that a company located in an EU member state should be subjected to that country's insolvency proceedings, even if the company is controlled by a group based elsewhere in the EU.
The ruling was in line with a recommendation made last September by one of the court's advocates general and with the position of Bank of America.
The US bank said in a statement it was delighted by the ruling and expected an Irish court to confirm that the Eurofood insolvency proceedings should stay in the country.
Parmalat declined to comment.
The spat over Eurofood is a small part of a wider legal battle between Parmalat and institutions including Bank of America and other banks.
The Italian group is pursuing litigation in US courts against its former lenders and auditors in a bid to recover at least €13.2 billion in damages.
In return, Bank of America is seeking more than $1 billion in damages from Parmalat, and auditors Deloitte & Touche said last month they had brought a claim for damages against the firm.
In addition, a criminal court case has been launched in Milan involving former Parmalat management and other officials including former staff of Bank of America in Italy.
Parmalat filed for insolvency in December 2003, burdened with debt of €14 billion after learning of a €4 billion hole in its accounts.