In re Parmalat Finanziara S.P.A.
| Decision Date | 30 September 2008 |
| Docket Number | Bankruptcy No. 04-14268(RDD).,No. 07 Civ. 7413(PKC).,07 Civ. 7413(PKC). |
| Citation | 394 B.R. 696 |
| Parties | In re PARMALAT FINANZIARA S.p.A., et al., Debtors in a Foreign Proceeding. ABN Amro Bank N.V., Appellant, v. Parmalat Finanziara S.p.A., Appellees. |
| Court | U.S. District Court — Southern District of New York |
Christopher Joseph Caruso, Moses & Singer LLP, New York, NY, for debtor.
Marcia Landweber Goldstein, Weil, Gotshal & Manges LLP, New York, NY, for appellee.
ABN AMRO Bank N.V. ("ABN") is the holder of a promissory note in the principal amount of $9,999,999.91 guaranteed by Parmalat S.p.A. When the note remained unpaid at maturity, ABN commenced a state court proceeding in New York against Parmalat S.p.A., as guarantor. Prior to the institution of the state court proceeding, Parmalat Finanziaria S.p.A. and Parmalat S.p.A. (collectively, "Parmalat") filed insolvency proceedings in Parma, Italy. Parmalat commenced proceedings in the United States Bankruptcy Court for this District and obtained an order enjoining ABN from commencing or continuing any legal proceeding in the United States against Parmalat or any of its property or proceeds thereof by reason of the pending insolvency proceedings. 11 U.S.C. § 304 (repealed 2005). A permanent injunction was entered by the Bankruptcy Court (Robert D. Drain, U.S.B.J.) on July 20, 2007. ABN has timely filed an appeal from the July 20 Order.
For the reasons discussed below, the July 20 Order is affirmed.
On March 27, 2003, Wishaw Trading Company S.A. ("Wishaw"), a corporation organized under the laws of Uruguay with its principal place of business in Milan, Italy, executed a promissory note in favor of Archer Daniels Midland Company ("ADM") in the amount of $9,999,999.91 (the "Note"). Contemporaneously, Parmalat S.p.A. executed a guarantee of the Note (the "Guarantee"). The Guarantee was signed by Calisto Tanzi, the Chairman of Parmalat S.p.A., and a representative of Banca Intesa S.p.A. certified the signature as that of a person "duly empowered to contractually obligate Parmalat S.p.A., (Italy)." The Note and Guarantee state that they are to be governed by New York law. Two signators acting on behalf of ADM endorsed the Note as payable to the order of ABN.
When Wishaw failed to pay the amount due under the Note by the maturity date, March 19, 2004, ABN commenced a state court action in New York against Wishaw, as the obligor, and Parmalat S.p.A., as the guarantor. ABN AMRO Bank N.V. v. Wishaw Trading S.A., Index No. 04/600787, Supreme Court, New York County (commenced March 22, 2004).
Prior to the institution of the New York action, on December 24, 2003, Parmalat had commenced judicial proceedings in Parma, Italy. The Parma Court declared Parmalat insolvent and Italy's Minister of Productive Activities appointed Dr. Enrico Bondi as Extraordinary Administrator.
On June 22, 2004, Parmalat also commenced proceedings under 11 U.S.C. § 304 in the Bankruptcy Court and sought entry of a preliminary injunction against ABN continuing the state court action against Parmalat S.p.A. and Wishaw, which was 16% owned by Parmalat. ABN objected to the entry of an injunction, focusing principally on its position that no order ought to extend to Wishaw, a non-party to the Italian insolvency proceedings. On July 2, 2004, the Bankruptcy Court entered a preliminary injunction (subsequently extended through May 4, 2007) which enjoined the state court action as against Parmalat S.p.A. but not as to Wishaw.1 Thereafter, Parmalat sought a permanent injunction which would limit ABN's remedies to the claims process in the Italian insolvency proceeding. In opposition to the entry of permanent injunction, ABN argued that "[t]he claims process in the Italian proceeding is prejudicial to ABN and other similarly situated creditors and does not provide for the just treatment of creditor." (Mar. 30, 2007 Supp. Obj. of ABN at 1.) ABN asserted that "[w]ith equal arrogance and arbitrariness, Parmalat and the Italian Court have repeatedly denied ABN the opportunity to prove the obvious — namely, that the [Note and Guarantee] ... were indeed executed on March 27, 2003." (Apr. 25, 2007 ABN Sur-Reply at 1-2.) Specifically, ABN objected to the Italian Court's application of the data certa statute which, it argued, required a particular type and quality of proof as to the date of execution of an obligation.2 ABN argued that the application of the statute to an obligation with a New York choice of law provision is repugnant to the law of the United States and justified the denial of comity to the Italian proceedings.
After a hearing held on June 21, 2007, the Bankruptcy Court issued a bench ruling, subsequently modified, granting the relief requested by Parmalat. The Bankruptcy Court found "that, on a general basis, the foreign proceedings in Parma provide for a comprehensive procedure for the orderly and equitable distribution of the foreign debtors' assets and the just treatment of creditors." (Modified Bench Ruling at 6.) Specifically, with regard to ABN's argument that the application of the doctrine of data certa to a contract that incorporated New York law was repugnant to United States law, the Bankruptcy Court referred to the catch-all provision in the Italian statute which allowed alternate means of proof. (Id. at 8.) Article 2704 () provides that "[t]he date of a private writing in which the signature has not been authenticated is not certain and cannot be asserted against third persons, except ... from the date on which other circumstances occur which establish with equal certainty that the writing was drawn up previously." The Bankruptcy Court concluded that "the data certa law has been applied by the Italian courts in a way that is consistent with U.S. notions of due process and fundamental fairness." (Id. at 9.) The court noted the availability of an appeal under Italian law. (Id.) On July 20, 2007 the Bankruptcy Court entered the Order from which an appeal was timely taken.
A bankruptcy court's analysis of the factors under section 304 of the Bankruptcy Code is reviewed for abuse of discretion. Argo Fund, Ltd. v. Bd. of Dirs. of Telecom Argentina, S.A., 528 F.3d 162, 169 (2d Cir.2008) (citing In re Treco, 240 F.3d 148, 155 (2d Cir.2001)). A bankruptcy court's factual findings are accepted unless clearly erroneous and its legal conclusions are reviewed de novo. Id.; see also Bondi v. Capital & Finance Asset Mgmt. S.A., 535 F.3d 87, 91 (2d Cir.2008).
Subsequent to the proceedings in the Bankruptcy Court, the Tribunale di Parma a three-judge tribunal, upheld the decision of the court presiding over the insolvency proceedings.3 The judge who issued the initial ruling was part of the panel, as is appropriate under local practice. The Tribunale concluded that the choice of law issue was governed by a provision of European Community law, Regulation 1346/2000, which requires the "application, to insolvency proceedings, of the law of the Member State in whose territory the proceeding itself was opened." (Tribunale di Parma, Judgment of Feb. 4, 2008 at 8.) The Tribunale viewed the proceeding as governed by principles of lex concursus because competing claimants were asserting entitlement to a single pool of assets.4 It viewed the policies underlying the "rigorous" enforcement of the methods of proving the date of an obligation as necessary to avoid backdating of obligations by a debtor. (Id. at 10.) The panel went on to review the emails that had been obtained from Parmalat in the course of the insolvency proceedings and concluded that they were "extremely generic" and did not establish the fact of the guarantee or its date of issuance. (Id. at 11.) It explained why, under local law, oral testimony was not permissible. (Id. at 11-13.)
The decision of the Tribunale di Parma is subject to the right of appeal to the Court of Appeal of Bologna and, if necessary, to the Supreme Court of Cassation of Italy. (Tracanella Decl. ¶ 8; Comet Letter of Feb. 20, 2008.) Because an issue of EU law is at stake, ABN may seek further review by the European Court of Justice. (Tracanella Decl. 18.)
Section 304, now repealed,5 permits a foreign representative to file a petition in bankruptcy court instituting a case ancillary to a foreign proceeding. 11 U.S.C. § 304(a) (repealed 2005). The bankruptcy court is empowered to "enjoin the commencement or continuation of — (A) any action against — (i) a debtor with respect to property involved in such foreign proceeding." 11 U.S.C. § 304(b). The statute lists six factors which the court is required to consider in deciding whether to grant relief under section 304(b). "[T]he court shall be guided by what will best assure an economical and expeditious administration of such estate, consistent with" the six factors:
(1) just treatment of all holders of claims against or interests in such estate;
(2) protection of claim holders in the United States against prejudice and inconvenience in the processing of claims in such foreign proceeding;
(3) prevention of preferential or fraudulent dispositions of property of such estate;
(4) distribution of proceeds of such estate substantially in accordance with the order prescribed by this title;
(5) comity; and (6) if appropriate, the provision of an opportunity for a fresh start for the individual that such foreign proceeding concerns.
11 U.S.C. § 304(c). A bankruptcy court is required to engage in a case-by-case balancing of these factors. Argo Fund, Ltd., 528 F.3d at 170 (citing In re Treco, 240 F.3d at 154).
ABN argues that the Bankruptcy Court failed to properly assess, balance and consider the section 304(c) factors. It focuses principally...
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