US court stays debt collection on Modi’s firm; PNB virtually can’t collect from these three firms

A US court has informally accepted the bankruptcy petition filed by Nirav Modi, the absconding diamantaire who has fled India after cheating Indian Banks, majorly the Punjab National Bank.

Mihir Bhansali, a President and Director of three companies connected to Nirav Modi, had filed the bankruptcy on behalf of ​his boss ​on Monday. Bhansali filed for bankruptcy of three firms- Fantasy Diamond, Fantasy Inc, and A Jaffe Inc. Nirav Modi’s company had filed for a chapter 11 voluntary petition in a New York Southern Bankruptcy Court.

On Monday, news reports broke of how Nirav Modi had not mentioned Punjab National Bank as a creditor in his bankruptcy filing. But bank and investigating officers are yet to confirm if the three companies have to be reported in FIRs. Monday, which co-incidentally also happens to the birthday of Nirav Modi, was the day he officially filed for bankruptcy.

The New York Court order​,​ which has appeared early on Friday​,​ can be viewed as one that aids Nirav Modi and his accomplices. The court passed an interim order that dissuades creditors and lenders to Nirav Modi’s Firestar International from their debt-recovery processes.

The order is an auto-stay on collection activities. The court in a two-page order said, “creditors generally may not take action to collect debts from the debtor or the debtor’s property.”

In what seems worse for investigators, law authorities and the banks, such creditors cannot resort to legal resort such as suing, asserting deficiency in pay-outs, re-assessing of property, or even attempt to contact Nirav Modi through mail, phone or any means.

“Creditors who violate the stay can be required to pay actual and punitive damages and attorneys fees,” court warned creditors. The court noted that the order and copies have been transmitted to multiple stake holders including the creditors of Firestar Diamond Inc.

The court has sought to convene a meeting of creditors on March 30. The court besides bankruptcy filing papers, has additional documents which suggests revenues and consignments estimated at a total of nearly $40.50 million. Firestar, and Fantasy Inc have consignments and merchandise estimated at $33.25 million. A Jaffe Inc reported that consignment with customers was valued at $7.3 million.

In any case, Punjab National Bank, the Indian state​-run bank, will have almost nothing to claim since, it has not been even categorised as a creditor ​i​n the bankruptcy filing. CBI and Enforcement Directorates are expected to have a tough time in solving this bankruptcy maze.

The court was informed that annual sales of Firestar Diamond, Fantasy and A Jaffe was to the tune of $90 million. The sales was with major department stores and super-speciality chains such JC Penney, Macy’s, US Navy, Jareds, Zales etc. It is astounding at how sales has been reported at only $90 million, when analysts, creditors, and even banking systems pegged Nirav Modi and his Firestar Inc at over a billion dollars. Is Nirav Modi’s Firestar Inc really worth only $90 million?

Or, is this con-artist on his way to dupe the legal system​ too​?

On a related note, Satish Acharya’s cartoon on Modi sarkar’s anti-corruption drive:

Also Read:

CBI finds secret Nirav Modi chawl; important documents seized

PNB not shown as creditor in US bankruptcy filing by Nirav Modi companies

Washington cannot confirm Nirav Modi’s presence

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