Bondholders of defunct dry bulk operator Deiulemar rejected out-of-court settlement with the Bank of Valletta (BOV).
The Maltese bank offered a €50m ($59m) settlement to Italian bondholders, in return for dropping a €363m claim against the bank, MaltaToday reports.
But the "confidential" offer was deemed “insufficient and inadmissible” by the creditors’ committee.
The development comes more than eight years after Deiulemar was declared bankrupt in 2012 owing more than €800m ($955m) to Italian bondholders.
That left 13,000 bondholders seeking to recover assets traceable to Deiulemar in different jurisdictions in Italy and abroad.
Representatives of bondholders allege the BOV held a trust with €363m of Deiulemar assets, from which bondholders are seeking damages.
A bank spokesperson cited by the Malta Post described the Deiulemar case as "completely without merit".
But they confirmed that bank had made the settlement offer on "a confidential, privileged basis" in order to find "a pragmatic solution".
Eight years on
The Deiulemar saga is the largest scandal to hit Italian shipping in a generation.
Prior to its spectacular demise, it had been one of Italy's largest dry bulk shipping companies.
But in 2014, several members of the three founding families were jailed for up to 17 years for illegal financial transactions related to the bankruptcy.
Bondholders have since waged a tireless battle to recover funds traceable to Deiulemar overseas.
Last month, a court of appeal in Rome ruled that €27m held in three trusts domiciled in Switzerland should be returned to Italy.
Fair hearing
The BOV is fighting the allegations levelled against it in the Italian courts.
In 2019, it filed against Italy before the European Court of Human Rights in Strasbourg worried that it may not get a "fair hearing" if the case is heard in the Tribunal of Torre Annunziata.
The court district adjourns the town of Torre del Greco, where Deiulemar was located and from where the majority of the bondholders originate.
Deiulemar was named after its founders Giovanni Battista Della Gatta, Michele Iuliano and Gisueppe Lembo.
Lembo, who had been the last surviving member of the trio, passed away in February this year.
