Nirav Modi firm’s liquidation stuck as assets remain attached by ED

The liquidation proceedings of Firestar Diamond International Pvt. Ltd, the group company of diamond fugitive Nirav Modi (In picture), are yet to begin though it has been one year since the case was admitted by the National Company Law Tribunal (NCLT).

Sources close to the process of liquidating the company say that the liquidation process has not begun as the company’s assets continue to be attached by the Enforcement Directorate (ED).

“We have been trying to get the assets detached from the ED but haven’t succeeded in it,” says a source who is part of the liquidation process. “A petition has been placed before the NCLT to get the company’s assets detached.”

“At present, it looks like the ED does not want to give us the assets without a proper court order.”

Some part of the assets of the company is in the form of diamonds and jewellery. “The company would have at least diamonds and other finished jewellery worth a few hundred crores for us to liquidate,” says the above-quoted source.

The liquidators are trying to bring on board the Gemological Institute of India to value diamond stock with the company.

The source says that claims of around Rs 9,000 crore from creditors have been registered with the liquidation professional. “While some part of it is secured credit, others like Letters of Understanding (LoUs) issued by banks are not considered secured credit. So, this Rs 9,000 crore includes all of this,” the sources said.

The liquidation professional has also asked the ED to give the books of accounts. At present, even the office of the debtor company Firestar Diamonds is not accessible to the liquidators.

Among the creditors are not just banks but also others to whom the company owes statutory dues.

The NCLT issued an order to liquidate Firestar Diamond International Pvt. Ltd in March 2020. Nirav Modi and Mehul Choksi are key accused in a Rs 14,000 crore Punjab National Bank case.

Three companies, Firestar Diamond Inc, A Jaffe, and Fantasy, in the US, owned by Nirav Modi were pushed into bankruptcy proceedings in the US. Finally, these companies were liquidated and as per reports, $11.04 million (Rs 82.66 crore) was available for creditors to split. Punjab National Bank, the lead banker in this case had received $3.25 million (Rs 24.33 crore) in the first tranche from the proceedings.

In fact, it was in 2018 when one LoU matured but the bank did not receive payments. The bank then went on to conduct an inquiry that showed that fake LoUs were issued.