Parmalat Brasil grinding to a halt

BRAZIL – The Brazilian arm of Parmalat has stopped much of its production due to a cash crisis.

Parmalat Brasilia Industria de Alimentos, which employs 6,000 people, has had to cease 60% of production because suppliers stopped delivering raw materials.

It is the latest development as the full effect of the collapse of the Italian dairy group comes to light. Although none of the company’s units in South America are officially for sale yet, potential buyers are already being talked about.
Last week, Parmalat Brasil filed for bankruptcy in the face of a string of lawsuits related to the collapse of its parent company and as it struggled to pay suppliers. The government in Brazil has appointed a minister to deal with the Parmalat crisis and its massive impact on the economy.

Parmalat expanded quickly in the South American region after starting an operation in Brazil. At the time of acquisitions, many said that the company was paying too much for its operations there.