Nirav Modi\'s second firm set for liquidation
Photo Credit: Reuters

Fugitive diamantaire Nirav Modi-owned Firestar International Pvt Ltd has been ordered for liquidation by the Mumbai bench of the bankruptcy court. This is a second liquidation order for a company owned by the scam-tainted businessman.  

Last year in February, another Modi group firm, Firestar Diamond International, was ordered for liquidation. 

The latest order comes after Firestar International was admitted for insolvency process before the National Company Law Tribunal (NCLT) in March last year on a plea by Corporation Bank (now merged with Union Bank of India) for a default of Rs 41.3 crore.  

A committee of creditors (COC) led by Punjab National Bank told the interim resolution professional of their decision taken in their joint lenders’ meeting to take Firestar International into liquidation.  

“A resolution for liquidation of the Corporate Debtor was passed by a voting share of 93.31%,” as per the NCLT order passed last week. The order is yet to be uploaded on the NCLT website. 

In June 2019, state-owned Corporation Bank, part of the consortium of 15 lenders to the diamond merchant’s firms Firestar Diamond International and Firestar International, approached the insolvency court in connection with two loan defaults

Without going through the resolution plan, the CoC observed that there are no business prospects with Firestar International and no substance in chasing the legal suits and cases for recovery.  

The NCLT’s order said the CoC observations saw no point in spending good money to make efforts to recover bad money, having very remote chance of recovery. Further, “the assets with the Corporate Debtor are not sufficient to repay the amounts of creditors” and “any resolution plan is not possible, which could enable the company to pay the entire debts”.  

The tribunal has appointed Santanu T. Ray as the liquidator to conduct of the liquidation proceedings.  

Modi, along with his uncle Mehul Choksi, the promoter of jewellery firm Gitanjali Gems, is accused of hatching one of the biggest banking frauds worth over Rs 14,000 crore (around $1.8 billion) that was first unearthed in February 2018.  

Modi was arrested in London in March 2019 and is currently fighting extradition to India, while Choksi was recently arrested in Dominica on May 26 for allegedly entering the country "illegally" from Antigua and Barbuda, where he has been living since January 2018. 

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