Parmalat USA Files for Bankruptcy

WASHINGTON - Parmalat USA Corp., a unit of Parmalat Finanziaria SpA, filed for Chapter 11 bankruptcy protection in the Southern District of New York today, listing assets and debts of at least $100 million each, Dow Jones Business News reports.

Parmalat Finanziaria declared insolvency in 2003 and faces major financial woes after the discovery of huge accounting irregularities.

In court filings Parmalat USA said its biggest unsecured creditor is Comerica Inc., with a $10.1 million bank loan outstanding. The company named only two other unsecured creditors in the filing, Banca di Roma Italy and Banca Intesa SpA, each with about $5.05 million in claims.

The filing didn't give a specific breakdown of the company's debts and assets. Parmalat filed a separate motion with the court today requesting more time to file those documents and notify creditors of its filing.

Parmalat USA filed along with two affiliates, Farmland Dairies LLC and Milk Products of Alabama LLC, in an effort to have the cases administrated jointly. The companies process, package, and sell milk to retail customers, mainly supermarkets.

According to court papers, Parmalat USA has an agreement with General Electric Capital Corp. for a $35 million debtor-in-possession loan to fund its operations during the Chapter 11 case, and Parmalat USA filed a separate motion seeking the court's approval of that deal.

The company said it intends to sell its operations "due to their deteriorating financial condition and lack of liquidity." It said it filed the Chapter 11 case to save the going-concern value of the operations for creditors.

Parmalat USA also asked the court's approval to hire Alix Partners LLC as a financial adviser and Lazard Freres & Co. as a financial adviser and investment banker. Parmalat USA said Lazard would help it with asset sales, and that "a number of prospective purchasers have signed confidentiality agreements and are in the process of conducting diligence. Certain of those parties have executed nonbinding letters of intent."

Parmalat USA said in court papers that it plans to file a motion aksing approval of a sale of its businesses "in the near future."

Today's filing is separate from one filed in January by liquidators of Parmalat Finanziaria's Cayman Islands holdings -- Parmalat Capital and its Food Holdings Ltd. and Dairy Holdings Ltd. affiliates -- which have been at the center of a major fraud investigation at Parmalat.

The filing by the Cayman liquidators was made not under Chapter 11, but under Bankruptcy Code Sec. 304, which allows a court to prohibit and suspend actions by U.S. creditors against both a company involved in a restructuring proceeding outside the United States and its property.

Parmalat Finanziaria objected to the move, and its restructuring chief, Enrico Bondi, has sought to have the Cayman liquidators removed. Court papers said a temporary restraining order connected with the Cayman liquidators' petition has been extended until March 2, when the New York bankruptcy court will hold a hearing on the matter.
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