Eurofood hopelessly insolvent, says judge

The High Court yesterday made an order winding up a "hopelessly insolvent" Irish firm, a wholly owned subsidiary of major Italian food group Parmalat SPA which is in deep financial crisis.

Much of the proceedings here had centred on whether the insolvency proceedings should be conducted in this jurisdiction or Italy.

In a reserved judgment yesterday, Mr Justice Kelly was satisfied that the presentation in Ireland of a petition for the winding-up of Eurofood IFSC Ltd and the appointment of a provisional liquidator to the firm on January 27th had brought about the opening of main insolvency proceedings. He held the "centre of main interests" of the company was and is within this State.

The judge was satisfied, on the evidence before him, that Eurofood was grossly insolvent and its creditors entitled to have it wound up in accordance with legislation in this State. The creditors were not required to participate in a procedure under Italian law which manifestly was not a winding-up but a form of reorganisation, the judge found. The winding-up petition was brought by Bank of America NA - owed about €3.9 million by Eurofood IFSC. Mr Pearse Farrell, appointed provisional liquidator in January, was appointed liquidator yesterday.

Eurofood, incorporated here in November 1997, providing financial facilities for Parmalat firms. It was subject to supervision by the Department of Finance, the Revenue and the Central Bank of Ireland, said the judge, and itstax benefits were conditional on it being managed and operated here.

Until November 12th last, it had two Irish and two Italian directors. On that date one Italian director resigned while the second Italian director resigned on January 20th. On Christmas Eve, Parmalat SPA was admitted to extraordinary administration proceedings in Italy and Mr Enrico Bondi was appointed extraordinary administrator. On February 9th, Mr Bondi was appointed extraordinary administrator of Eurofood by the Italian Ministry for Productive Activities. This appointment, said Mr Justice Kelly, was made despite knowledge on Mr Bondi's part that the High Court here had appointed a provisional liquidator.

The judge said that on February 10th, the provisional liquidator received a communication from Mr Bondi, that he was appointing three Italian men as directors of Eurofood and was removing an Irish director.

No consent was sought from the Irish Department of Finance for the purported change of directors.

A Parma court had admitted Eurofood into insolvency and found its "centre of main interests" was in Italy not Ireland. Given the appointment of the provisional liquidator here, it was said Mr Bondi ought not to have sought the order in Parma.

Mr Justice Kelly said his task was to decide whether or not to wind up Eurofood here.He was satisfied that insolvency proceedings were opened here on January 27th. He also directed the liquidator could appeal the Parma court's finding that the centre of main interests was in Italy.