PNB receives $3.25 mn from liquidation of Nirav Modi-owned Cos in US
Punjab National Bank (PNB) has received Rs 24.33 crore ($3.25 million) as proceeds from the liquidation of Nirav Modi-owned companies undergoing bankruptcy proceedings in the US.
Three companies promoted by Nirav Modi — Firestar Diamond Inc, A Jaffee Inc and Fantasy Inc had filed for Chapter 11 Bankruptcy Protection in the Southern District of New York, United States of America. Upon liquidation of the debtors’ assets by the US Chapter 11 Trustee, a sum of $11.04 million (Rs. 82.66 crore) was available for distribution to unsecured creditors including PNB.
The bank expects more recoveries from the liquidated assets subject to other expenses and settlement of claims of other claimants.
In a press statement issued by the Ministry of Corporate Affiars (MCA), the ministry has said the maiden repatriation of $3.25 million is an unprecedented achievement of the government in its fight against corporate fraud in overseas territory. It informed that once PNB came to know about the bankruptcy proceedings of the three Nirav Modi-owned companies in the US, it requested the Ministry of Corporate Affairs to support and join the bankruptcy proceedings in New York, USA in order to help PNB realize its claims in the debtors’ assets.
The US Bankruptcy Court of Southern District of New York on 26 July 2018 recognized the claims of PNB in the proceeds of sale of assets of the properties of the debtor companies. It also authorized PNB to issue subpoenas to compel the examination of Nirav Modi, Mihir Bhansali and Rakhi Bhansali under oath.
Subsequently, on 24 August 2018, the examiner appointed by the New York Bankruptcy Court submitted his report. The Report explains the modus operandi of the fraud, and the manner in which the US-based employees of the debtors participated in the fraud.
One prominent feature of the fraud was the apparent façade of independent companies, which were, in reality, entities promoted and/or controlled by Nirav Modi and were engaged in ‘round-tripping’ of the diamonds amongst themselves.
The Ministry has also initiated proceedings for disgorgement of monies from entities promoted and controlled by Nirav Modi and Mehul Choksi.
