Parmalat Turns to Risky Legal Theory

Parmalat Finanziaria SpA has employed a damages claim rarely used in Italy's civil courts in its latest lawsuit seeking $5.5 billion from UniCredito Italiano SpA and J.P. Morgan Chase & Co. The suit filed by the bankrupt dairy group is based on "deepening insolvency," a concept largely used by local magistrates in criminal proceedings. To prove damages, the company must show the banks knew of the true financial situation of the dairy and unlawfully provided it with credit they shouldn't have.

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