Irish prevail in feud over Italian food giant

A tussle over the rights to wind-up a Dublin-based subsidiary of the
scandal-hit Italian food giant Parmalat could go in favour of an Irish
liquidator, after a ruling by the European Court of Justice.

Both Irish and Italian liquidators had contested the rights to deal with
Eurofood, a Parmalat financing company, but the ECJ ruling effectively
guaranteed the rights of the publicly appointed liquidator in Ireland.

The case further illustrates the difficulties that arise when the courts are
dealing with cross-border insolvencies. In theory, the rights of Italian
liquidators were recognised, but the ECJ did not see that as the end of the
case. The court was asked to decide how European law affected the choice of
jurisdiction over such matters.

The key issue, said the ECJ, was whether Eurofood actually carried out
business for Parmalat, or whether it was effectively a shell company, used for
tax or other ancillary purposes by the parent.

If Eurofood did carry out useful work for Parmalat, ‘the mere fact that its
economic choices can be controlled by a parent company’ would not be enough for
a liquidator in the parent company’s home country to prevent winding-up
proceedings in the state where the subsidiary was registered.

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