Fugitive diamantaire Nirav Modi's firm Firestar Diamond International Pvt. Ltd is set to be liquidated after the Mumbai bench of the insolvency court passed the order last week.
Modi, along with his uncle Mehul Choksi, the promoter of jewellery firm Gitanjali Gems, and others are accused of hatching one of the biggest banking frauds that unearthed in February 2018.
This is said to be the first-ever liquidation order for any company embroiled in a scam.
The ruling to liquidate Modi's scam-scarred company Firestar Diamond International was taken after the insolvency tribunal noted that there are no business prospects with the corporate debtor and no substance in chasing the legal suits and cases of recovery.
“There is no point in spending goods money to make efforts to recover bad money, having very remote chance of recovery and that the assets with the company are not sufficient to repay the amounts of creditors, according to the NCLT order.
Any resolution plan is not possible, which could enable the company to pay the entire debts, it said.
Firestar Diamond International is not a running concern and recovery action has already been initiated by the banks against the firm and its guarantors.
Furthermore, all secured and unsecured assets are attached by the Enforcement Directorate and under the adjudication before various forums. Banks are contesting the PMLA cases for releasing the secured assets and to take the unsecured assets.
Santanu T Ray has been appointed as liquidator of Firestar Diamond International and will take control of all the powers from the board of directors, key managerial persons, the partners of the firm.
Modi was arrested in London in March last year and is currently fighting extradition to India, while Choksi, according to reports, is residing in the Caribbean nation of Antigua and Barbuda.
In June 2019, state-owned Corporation Bank, part of the consortium of lenders to the fugitive diamantaire’s firms Firestar Diamond International and Firestar International, approached the insolvency court in connection with two loan defaults.
Firestar Diamond had already filed for bankruptcy in New York in 2018.
Both Modi and Choksi are accused of fraudulent transactions that led to losses of roughly $2 billion for India's second-largest government-owned bank, Punjab National Bank (PNB).
Last month, markets regulator SEBI fined Choksi's firm for withholding information related to the company from investors, regulators and Stock Exchange.
Established in Mumbai since September 2006, Firestar Diamond International was started by Modi to undertake manufacturing and export of diamond jewellery.