Parmalat special administrator Enrico Bondi is gearing up for a titanic contest with Cadwalader Wickersham & Taft and Ernst & Young (E&Y) as it emerges that he has dropped long-time Parmalat adviser Maples and Calder.
Bondi is trying to oust E&Y and Cadwalader from the provisional liquidation of three Cayman companies: Food Holdings, Dairy Holdings and Parmalat Capital Finance Limited (PCFL). The battle to control the provisional liquidation of these companies is the first formal procedure outside Italy within the administration.
Although Bingham McCutchen beat Cadwalader in a beauty parade at the end of last year to act for the majority of the bondholders, Cadwalader – led by London partner Andrew Wilkinson – stole a march on other creditors this month.
Along with Cayman firm Walkers, it successfully petitioned to wind up the three Parmalat subsidiaries in Cayman and install E&Y partners Jim Cleaver and Gordon MacRae as provisional liquidators.
Of the three companies, PCFL is central to the dispute. PCFL’s subsidiary is Bonlat, the Cayman company that triggered the Italian food group to file for bankruptcy protection when it was discovered that $4.9m (£2.7m), which was supposed to be held in a US account, did not actually exist.
E&Y’s role is now being vigorously contested by Bondi, who is pressing for E&Y to be replaced by partners at PricewaterhouseCoopers. The parties have now flown in two 3/4 South Square silks for the case. Michael Crystal QC is advising E&Y and Cadwalader, while William Trower QC has been called in for Parmalat.
Cadwalader stepped up the battle when last Thursday (22 January) it advised E&Y on a filing under Section 304 of the US Bankruptcy Act. The tactic allows court-appointed officers to get recognition of their positions outside the US.
The Cayman claim was due to be heard last Wednesday (21 January). However, the hearing has now been delayed after Bondi suddenly dropped Maples and Calder from the action and replaced the firm with two-partner Cayman firm Turner & Roulstone.
Cadwalader’s role advising E&Y has raised eyebrows among restructuring professionals. The two firms have had a famously combative history and have clashed on Barings, TXU and Cenargo.