Parmalat

Situation

Parmalat was a major food manufacturer that filed for bankruptcy in 2003 after missing a debt repayment. The bankruptcy took the market by surprise and details soon began to emerge about various accounting and financial irregularities involving Parmalat, in general, and certain of its Latin American subsidiaries, in particular. Various investors brought legal action against Bank of America, alleging fraud and misconduct, with respect to a particular deal involving equity investments by several special purpose vehicles in a Brazilian subsidiary of Parmalat.

Engagement

Gordian Group was engaged to provide expert witness and consulting services relating to these complex financial transactions in adversarial proceedings against the financial advisor engaged by the food company in connection with these transactions. Gordian Group performed extensive quantitative and qualitative analyses to evaluate these investments, including valuation, solvency and credit analyses of Parmalat and relevant subsidiaries, as well as a review and analysis of the role and obligations of these defendant institutions at the time of the transactions (i.e., comparing their actions to underwriting and banking industry standards, best practices and responsibilities).We utilized our work to analyze and calculate damages suffered by the plaintiff entities. Our engagement required extensive review and analysis of a number of financial transactions effected by Parmalat and related entities prior to its bankruptcy in order to successfully prepare credible arguments in support of the damages analysis. Gordian Group prepared an expert report and defended its views in deposition and at trial.

Outcome

The judge agreed with Gordian Group’s conclusions and cited our report and testimony several times in his opinion; nevertheless, the judge was unable to rule in favor of our client due to matters of law. The matter is up for appeal.