August 17, 2005
A bankrupt firm in Italy is suing the banks who helped it issue the bonds it defaulted on. Parmalat Finanziaria SpA claims that Italy’s UniCredito Italiano SpA and America’s J.P. Morgan Chase & Co. knew it was in lousy financial condition when it agreed to help the firm issue bonds from 1997 to 2001. By doing so, says the lawsuit, filed in court in Parma, Italy, the two banks helped it continue in business and lose even more money. The suit claims about $5.5 billion in damages; the total face value of the bonds raised was $2 billion.
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