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. Last Updated: 07/27/2016

Parmalat Files for Bankruptcy

PARMA, Italy -- Italian food group Parmalat filed Wednesday for fast-track bankruptcy protection under an emergency government decree, a company lawyer said.

Dario Picone told reporters that the firm was filing for protection from creditors under a decree adopted by the government Tuesday.

"We have presented the request under the decree," he said.

Parmalat's crisis erupted last week when it said Bank of America had dismissed as false a statement showing nearly 4 billion euros' ($4.9 billion) worth of cash and investments attributed to a Cayman Islands unit of the group.

A judicial source said the hole in Parmalat's accounts was now estimated at about 7 billion euros, confirming media reports that previous management did not buy back 2.9 billion euros of Parmalat's bonds as stated in its accounts.

But investigators and Italian newspapers said the hole could be more than 10 billion euros.

On Tuesday the Italian government took a major step to help Parmalat employees. Italian Industry Minister Antonio Marzano told reporters the government had issued a decree aimed at safeguarding the interest of employees of companies with more than 1,000 workers and more than 1 billion euros of debt.

The way the decree is supposed to work is that a company in financial trouble would pursue the government's support to seek the appointment of a commissioner with special powers to restructure the company. The commissioner would ensure that the company in trouble continues producing its goods and paying its salaries. Parmalat's new president and CEO, Enrico Bondi, was expected to be named the commissioner.