Fugitive diamantaire Mehul Choksi's Gitanjali Gems heads for liquidation
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Absconding diamantaire Mehul Choksi-promoted Gitanjali Gems Ltd is headed for liquidation after a majority of its lenders decided not to extend the 180-day period to complete its insolvency resolution process.

The company said in a stock-exchange filing that, since the committee of creditors didn't approve an extension, "the next logical step" would be to go for liquidation.

The creditors, during their fifth meeting on March 28, rejected an extension of the insolvency resolution process with 54.14% voting share, Gitanjali Gems said.

The 180-day period to complete the insolvency resolution process ended on April 6.

Gitanjali Gems promoter Choksi and his nephew Nirav Modi were at the centre of the $2-billion fraud at Punjab National Bank last year. The state-run bank had said at the time that two jewellery groups led by Modi and Choksi had raised credit from overseas branches of other Indian banks using illegal guarantees issued by rogue PNB staff over several years.  

Indian investigators have been looking for the duo ever since. Both Modi and Choksi have denied any wrongdoing and fled India last year. Modi was recently spotted in London last month and is seeking political asylum.

In October last year, the National Company Law Tribunal (NCLT) admitted the insolvency petition filed by ICICI Bank against Gitanjali Gems under the Insolvency and Bankruptcy Code (IBC). This was the first insolvency petition filed by the lender since government agencies launched a probe against Choksi and Modi for their alleged involvement in the PNB fraud.

In March this year, an appellate tribunal stayed an order allowing the Enforcement Directorate to attach the assets of Gitanjali Gems after ICICI Bank argued that this was preventing the bankruptcy process from going ahead.

ICICI Bank claims dues of Rs 890.20 crore from Gitanjali Gems, with a 7.09% voting share in the committee of creditors, according to a separate stock-exchange filing.

Overall, 31 financial creditors have claimed dues of Rs 12,558.15 crore from Gitanjali Gems. PNB has the largest exposure of Rs 5,518.5 crore and the highest voting share of 43.94%. 

Corporation Bank (Rs 543.82 crore) and Allahabad Bank (Rs 521.81 crore) are among the other major lenders to the jewellery company.

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