The dedicated bankruptcy court has ordered Nirav Modi's main company Firestar International Ltd. to be liquidated, and Shantanu T. Ray has been appointed as liquidator.
Nirav Modi is being held in a London jail by the Enforcement Directorate, the Central Bureau of Investigation, and other law enforcement agencies on charges of defrauding the state-owned Punjab National Bank of Rs 13,400 crore. “During the second CoC (Committee of Creditors) meeting on July 15, 2020, the CoC informed the IRP that based on the decision taken by the CoC members in their Joint Lenders Meeting, they want to put the Corporate Debtor (Firestar Diamond) into liquidation,” the Mumbai bench of the National Company Law Tribunal (NCLT) observed in its 7-page order. “With a voting share of 93.31 percent, a resolution for the liquidation of the Corporate Debtor was passed.”
The lenders noted that the company has no business prospects when they approached the tribunal with their petition for liquidation. “There is no point in pursuing legal actions and recovery cases. “There is no point in spending good money to try to recover bad money that has a very slim chance of being recovered,” the lenders claimed. “There is no way to come up with a resolution plan that will allow the company to pay off all of its debts.”
In a ruling dated 10 August a division bench consisting of judicial member H.V. Subba Rao and a technical member Shyam Babu Gautam authorized the lenders' request for liquidation. The Pune bench of the debt recovery tribunal (DRT) issued a recovery certificate last July. It ordered Nirav Modi, the fugitive diamantaire, to pay Punjab National Bank (PNB) and others approximately Rs 7,200 crore.
Nishit Dhruva, the managing partner of law firm MDP & Partners and a Corporation Bank advisor, verified the news but refused to provide any other details. "We will use our experience from previous assignments like Nakshatra World, Vikram Kothari, REI Agro, Varrsana Ispat Limited, and others to expedite the de-attachment and sale of the assets for distribution to stakeholders and achieve the objectives of IBC," said Anil Goel, founder chairman of AAA Insolvency Professionals, and Shantanu Ray, a partner from AAA Insolvency.
After Nirav Modi's Firestar Diamond International Pvt. Ltd. and Firestar International Ltd. defaulted on dues of Rs. 38.65 crore and Rs. 41.31 crore. Corporation Bank, one of the consortia of lenders to Nirav Modi's Firestar Diamond International Pvt. Ltd. and Firestar International Ltd., approached the tribunal in June 2019. Corporation Bank was a member of a consortium managed by Punjab National Bank (PNB) that supplied money to Nirav-backed businesses. On a complaint made by PNB, one of the largest public sector banks and one of the lead lenders of Nirav Modi's flagship company, Firestar International, the CBI discovered a bank fraud worth Rs. 14,357 crores in January 2018.
In July, the tribunal ordered the liquidation of Nakshatra World, a subsidiary of Mehul Choksi's Gitanjali Gems, and the NCLT authorized the appointment of Santanu Ray as the company's liquidator. The UK's Crown Prosecution Service (CPS) is currently evaluating a London High Court judgement granting Modi permission to appeal against his extradition order with the Indian government for the next step in the legal procedure.
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