WEB DESK
A US court has passed an interim order that prevents creditors from collecting debt from Nirav MoAdi-owned Firestar Diamond Inc. after it filed for bankruptcy.
Nirav Modi, who is being investigated by multiple probe agencies for allegedly cheated the Punjab National Bank to the tune of around 12,000 crore rupees, has a majority stake in Firestar Diamond and its other sister companies.
Entering an order for relief, the US bankruptcy court in the Southern District of New York said, the filing of case imposed an automatic stay against most collection activities.
The court said, creditors who violate the stay will have to pay actual and punitive damages and attorneys fees.
Meanwhile, reacting to media reports that Nirav Modi is in the US, the State Department said, it cannot confirm the news.
Asked if it is providing any assistance to the Indian government in tracing the diamond jeweller, the department’s spokesperson said, they would refer the matter to the Department of Justice.
Modi and his uncle Choksi, owner of Gitanjali Gems Ltd, left the country in January before the fraud came to light, but have said in letters and statements they are innocent.
The federal investigators have, however, attached or seized assets belonging to Modi and his companies. Firestar is not named in the police complaint.
“Early expressions of interest in purchasing some or all of the debtors’ business operations have been strong,” Firestar Diamond said in a court filing on Wednesday.
It has also told secured lenders it was in discussions with lenders for debtor-in-possession financing as it weighed options.
Firestar Diamond and its affiliates had annual sales of around $90 million, with clients such as Costco Wholesale, Macy’s and JC Penney Co Inc., it said.
The Central Bureau of Investigation (CBI) has arrested at least 13 people, seven from the bank and six from Modi and Choksi’s companies. Investigators have also seized a number of properties from the two, including jewellery and luxury vehicles.
“Among the properties seized and businesses closed were factories in India which produced most of the fine jewellery merchandise sold by the debtors to their customers,” Firestar said in its filing.