The company Calisto Tanzi founded collapsed in 2003 when people learned its $5.4 billion bank account balance didn’t exist.
A 2-1 panel of the Second Circuit today upheld an order that allowed American-style securities fraud litigation to move forward despite the Italian bankruptcy of the principal defendant, Parmalat. The court held that 11 U.S.C. 304 — a part of the old U.S. Bankruptcy Code, which went the way of the dinosaurs in 2005 — didn’t require the district court to enjoin proceedings against the successor to Parmalat. The court cited, among other reasons, the fact that the Italian court needn’t accept a U.S. judgment but that liquidating U.S. securities claims in the U.S. will advance resolution of the great big sprawling litigation whether by settlement or judgment. Bondi v. Capital & Finance Asset Mgmt. S.A., No. 07-2949-cv (2d Cir. July 22, 2008).
