EU Demands Information On Italy's New Insolvency Decree

By Agence France-Presse The European Commission said Dec. 23 that the Italian government must provide information about its new decree to help the restructuring of insolvent companies that have more than 1,000 employees and are 1 billion euros (US$1.2 billion) in debt. Tilman Lueder, spokesman for Competition Commissioner Mario Monti, said, "In light of the fact that we have had proceedings with the Italians over bankruptcy legislation, we would like to have assurance that this version is free of fiscal elements." The Italian government launched the insolvency decree Tuesday as the collapse of Parmalat Finanziaria SpA, the country's leading food group, in an accounting scandal threatened thousands of jobs and rocked the financial markets. Italian Industry Minister Antonio Marzano, speaking at a news conference after a cabinet meeting, said the introduction of the new legislation would be "very, very fast." He said, "It will apply to all cases in which circumstances exist, the first being Parmalat." Previously, the European Commission, the European Union's executive body, had overturned Italian legislation known as the Prodi law, which gave fiscal advantages to companies that were insolvent. Lueder said the commission wanted to know how the new decree would benefit companies and if it offered companies fiscal advantages. He said any measures taken by the state to protect companies must be fiscally neutral and in no way entail the government giving up debt that it holds in a company. Measures must not mean the state forgoes "fiscal resources or puts at risk the treasury's money," he said. Italian news agencies citing criminal investigators on Tuesday said the Parmalat accounting scandal had widened to seven billion euros -- the phantom 3.9 billion thought to be in a Bank of America account and another 2.9 billion in bonds. Press reports have said the hole could in fact be closer to 10 billion euros. Copyright Agence France-Presse, 2003