Parmalat Capital Finance Ltd. v. Bank of America Corp.
671 F.3d 261
| 2d Cir. | 2012Background
- Parmalat collapse in 2003 led Old Parmalat's Italian bankruptcy estate to appoint Bondi as Extraordinary Commissioner.
- PCFL (Parmalat Capital Finance Ltd.) is a Cayman‑based subsidiary in liquidation; Concordato in Italy governs Parmalat's reorganization.
- Bondi and PCFL commenced §304 bankruptcy actions in SDNY to enjoin U.S. litigation against Parmalat entities and related parties.
- Securities class actions against Grant Thornton and others proceeded in the US; Bondi and PCFL separately filed state court claims against Grant Thornton.
- District Court granted summary judgment to defendants; on appeal, this Court remanded for a Timely Adjudication analysis under 28 U.S.C. §1334(c)(2).
- Court vacates District Court judgments, holds abstention mandatory, and directs transfer to Illinois state court for remand to Illinois state court before final disposition.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether abstention under §1334(c)(2) is mandatory on timeliness grounds | Parmalat urged timely adjudication in state court weighs in favor of abstention. | Grant Thornton argued abstention not warranted given avoidance of delay and complexity. | Abstention found mandatory; proceedings timely adjudicable in Illinois state court. |
| Whether the four-factor test supports remand to state court | Factors favor timely adjudication and efficient administration; complex state-law issues. | Factors weigh against remand due to potential delay and district familiarity. | Four-factor test favors remand; abstention mandatory. |
| Whether the district court erred by considering an alternative basis for abstention not raised below | Waived/mandate limited to timely adjudication; alternative grounds not preserved. | Alternative grounds argued on remand were improperly considered. | Argument waived; remand based on timeliness analysis only. |
| Whether the case can be timely adjudicated in Illinois state court without affecting the bankruptcy proceedings | State court timing would not impede the Parmalat Concordato or estate liquidation. | State proceedings would unduly delay or affect federal bankruptcy process. | Yes; timely adjudication in Illinois is possible and does not affect estate administration. |
Key Cases Cited
- Parmalat Capital Fin. Ltd. v. Bank of Am. Corp., 639 F.3d 572 (2d Cir. 2011) (reaffirmed four-factor timeliness framework for mandatory abstention)
- Bondi v. Parmalat Finanziaria S.p.A., 535 F.3d 87 (2d Cir. 2008) (established status of Parmalat estates and in pari delicto considerations)
- In re Georgou, 157 B.R. 847 (N.D. Ill. 1993) (four-factor timeliness considerations for abstention)
- Leco Enters., Inc., 144 B.R. 244 (S.D.N.Y. 1992) (early articulation on timely adjudication and abstention)
- Stoe v. Flaherty, 436 F.3d 209 (3d Cir. 2006) (timeliness analysis in bankruptcy-related abstention)
- Stern v. Marshall, 131 S. Ct. 2594 (2011) (federalism considerations in bankruptcy proceedings)