Grant Thornton LLP won dismissal of a lawsuit alleging accounting malpractice related to the 2003 bankruptcy of Parmalat SpA.
U.S. Bankruptcy Judge John Darrah granted a summary judgment to the Chicago-based accounting firm in an order entered April 9 in Chicago district court. After a 10-year legal history involving several changes of venue, Darrah said he would retain jurisdiction over the case, and rule in favor of Grant Thornton for the same reason a prior court had.
“These cases have remained unresolved for nearly ten years, and it is unlikely that a remand back to state court will result in more timely dispositions of the cases,” Darrah wrote.
Parmalat, the Italian diary giant sought protection from creditors in December 2003 after an accounting scandal. It completed its Italian reorganization in October 2005, giving bondholders 50 percent of the new stock while Italian and foreign banks received 30 percent.
In a parallel bankruptcy in the U.S., Parmalat’s foreign representative Dr. Enrico Bondi sued Grant Thornton in Illinois state court, alleging accounting malpractice, negligent misrepresentation, and civil conspiracy. The suit was transferred to federal district court in New York.
U.S. District Judge Lewis Kaplan in Manhattan dismissed the suits in September 2009 based on a defense known as the in pari delicto doctrine. Under the theory, no one can sue to recover damages from a fraud in which it was a willing participant.
Kaplan dismissed the suit on what’s known as a motion for summary judgment. Bondi had appealed, contending there was no definitive ruling on whether Illinois law would impose the in pari delicto defense on a bankruptcy trustee.
Grant Thornton asked the federal district court in Chicago to dismiss the suit rather than send it to state court.
“Grant Thornton’s motion to retain jurisdiction and enter judgment is granted,” Darrah wrote.
Parmalat, based in Collecchio, Italy, disclosed more than 14 billion euros ($20.1 billion) of debt when it filed for bankruptcy, about eight times the amount reported by its former management.
The case is Bondi v. Grant Thornton International, 04-6031, U.S. District Court, Northern District Illinois (Chicago).