Financial Services Litigation & Investigations Group
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In the face of turmoil and uncertainty, the world's major financial institutions continue to choose our team to help them manage their business, litigation and reputational risks and thrive in the new economic and regulatory climate. To our clients we are much more than litigators - we are business partners who have a stake in their success.
Paul, Weiss Wins $1 Billion Judgment for Citi in Parmalat Litigation
- Client News
- April 18, 2019
Eleven years after Paul, Weiss litigation partner Ted Wells won a trial verdict for client Citigroup Inc. in New Jersey, Italy’s Supreme Court ruled on April 16 that the 2008 court award against failed Italian dairy giant Parmalat SpA is final and enforceable in Italy. The decision means that Citigroup will finally be able to collect on the award – now nearly tripled in value to more than $1 billion – capping a series of favorable pretrial, trial and appellate rulings.
Parmalat filed for bankruptcy in 2003 after it was revealed that the company had overstated sales and profits for more than a decade and carried billions of dollars more debt than it had declared. The company’s insolvency administrator subsequently sued Citigroup and more than 30 other banks and auditors, alleging negligence in spotting the fraud; Citigroup alone faced multibillion-dollar liability. But instead of settling, as almost all of the other defendants did, Citigroup, relying on Paul, Weiss, argued in a counterclaim that the bank, as one of Parmalat’s largest lenders, was the victim of Parmalat’s fraud, and not part of it.
Paul, Weiss took the case to trial, and in 2008 the jury totally rejected Parmalat’s request for more than $2 billion in damages against Citigroup and awarded Citigroup $364.2 million in damages on its counterclaim, earning litigation partner Ted Wells a “Litigator of the Week” nod in The American Lawyer. The award was sustained following appeals and confirmed in 2014. Since 2014, the bank has been attempting to enforce the award, which under an earlier ruling was set at 341 million shares in the new Parmalat. Because the value of those shares has nearly tripled, the original judgment is now worth €971.85 million, or $1.098 billion.
The Paul, Weiss team in the underlying litigation was led by litigation partners Ted Wells and Brad Karp and included litigation partners Andrew Ehrlich and Jaren Janghorbani and counsel Steven Herzog and Daniel Levi.