Linklaters faces £115m Credit Suisse claim over Parmalat advice
Credit Suisse is set to sue Linklaters for €136m (£115m) for professional negligence over advice it was given for a deal with Italian food giant Parmalat.
Linklaters
The claim dates back to a €500m convertible bond issued by Parmalat’s Brazilian subsidiary Parmalat Brazil in 2001, to which the investment bank subscribed, and a complementary forward sale agreement (FSA) that saw the company pay the bank €248m in return for future share entitlement.
Capital markets partner Simon Firth led the Linklaters team on the deal, which came two years before Parmalat went into administration in December 2003.
The terms of the FSA meant that Credit Suisse was liable to repay some or all of an advanced payment of €248m to Parmalat’s administrator. The administrator brought a recovatory action against the company to unwind the 2001 transaction, with Parmalat ultimately settling for €154m.
A letter before action sent to Linklaters’ counsel Clyde & Co and seen by The Lawyer states that Credit Suisse feels that the magic circle firm’s advice on the transaction was negligent and, as a result, the bank alleges that it was denied the chance to negotiate better terms.
Allen & Overy is advising Credit Suisse with litigation partner John O’Conor believed to be leading. The bank has also taken advice from Brick Court silks Jonathan Sumption QC, Mark Howard QC and Tom Adam QC. Italian firm Chiomenti Studio Legale is also advising the bank.
The letter further states that Credit Suisse would not have entered into the original deal if it had known that the advanced payment was recoverable by Parmalat’s administrator.
The claim centres on what circumstances needed to apply for Parmalat’s administrator to reclaim money paid to Credit Suisse under the FSA.
Firth sought advice from Linklaters’ then Italian alliance partner Gianni Origoni Grippo & Partners and concluded that Credit Suisse would only be liable for claw back proceedings if it had, or should have had, prior knowledge of Parmalat’s insolvency. Credit Suisse alleges that this advice was negligent.
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Readers' comments (25)
Wallander | 12-Feb-2011 12:08 pm
This article hasnt got the facts quite straight.
The advice in question was given by Links' ex-Italian allies Gianni Origoni.
The advice was no given by Links.
CS are trying to make Links vicariously liable for Gianni Origoni's advice.
So it wasnt Links advice in the first place and even if they are vicariously liable for Gianni they will presumably be able to claim on Gianni's insurance.
A catastrophe it is not.
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Rural bliss | 12-Feb-2011 6:29 pm
I wonder if A&O will be acting under a CFA - that would be some success fee!
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Anonymous | 12-Feb-2011 11:17 pm
Pipes was being sarcastic
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Scep Tick | 14-Feb-2011 9:23 am
Advice in 2001, claim in 2003? Hope a claim form's been issued, or else Dr Limitation will be knocking at a summary judgment door.
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Fedr | 14-Feb-2011 9:24 am
What is the problem here? The advice was given by Italian law firm, not Linklaters. Does it mean that Links were supposed to check themselves what Italian bankruptcy law says and how it is interpreted by courts? What is the purpose of hiring a correspondent law then? Or, does it mean that whatever correspondent law firm says is automatically attributed to Linklaters? If Italians screwed up, they should be responsible for it. Or, am I missing something?
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Anonymous | 14-Feb-2011 12:59 pm
I would be careful jumping to any conclusion. First, Simon Firth is an excellent solicitor. Second, his advice would be based on Itallian law advice. Third, remember the Lehman bankruptcy report which proved to be groundless in its criticism of Linklaters.
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Donald Duck | 15-Feb-2011 2:03 am
The number is large but will be well within Links' E&O programme ~ but it might cost them on renewal. Face it, one ALLEGEDLY bad piece of advice does not mean that the fate of Andersens awaits Links. I suspect Links were not negligent and that the claim will fail; that would be my bet. And "NO" I do not work with Links!
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Anonymous | 15-Feb-2011 5:07 pm
Reading all these posts makes me laugh. Almost invariably they have been written by disgruntled former employees who clearly did not cut the mustard. As a former Linklaters associate who was there for the best part of a decade and who is now a partner elsewhere, my view remains that it is a great firm. Linklaters paid their redundant staff huge sums of money in the recession, far in excess of their competition. As far as these claims are concerned, it goes with the job. Linklaters advise clients on major transactions and litigation (Parmalat and Levicom are no exceptions). It is inevitable that there will be clients who look at suing their lawyers. As for lasting damage, I am quite sure there wont be. This is merely a minor scratch on the surface of a well run, successful firm. The ludicrously overly-emotional comments show the anger of posters who are clearly jealous and still harbour resentment for being managed out.
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Anonymous | 15-Feb-2011 7:49 pm
I believe that Linklaters appeal of the Leviton case is still pending before the Supreme Court.
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Anonymous | 16-Feb-2011 9:33 am
Anonymous | 15-Feb-2011 5:07 pm:
I think you work in HR at Linklaters.
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