Mumbai/Bengaluru: A New York court has approved the bidding procedure for assets sale by firms linked to jeweller Nirav Modi, who is at the centre of the $2-billion fraud at Punjab National Bank (PNB).
The court also approved a plan to use proceeds of the asset sale to repay $20 million in dues to HSBC Bank USA and Israel Discount Bank of New York. This comes at a time when PNB is planning to take part in bankruptcy proceedings of Firestar Diamond Inc., a Nirav Modi company.
On 26 February, Firestar Diamond and other two affiliates (Fantasy Inc. and A. Jaffe Inc.) filed for bankruptcy in the US under Chapter 11 voluntary petition, stating disruption of supply chain.
PNB is seeking the advice of legal experts to participate in the US proceedings, Press Trust of India reported on 12 March.
Calls and a message sent to Sunil Mehta, managing director of PNB, seeking comment did not elicit any response.
Firestar and affiliate firms have been working on sale of assets and moved a motion in the US court to establish bidding procedure, set hearing date and approve the proposed sale, among others.
According to the firm’s court filing, the process is designed to test the market for the highest and best value available under the circumstances.
The court approved the bidding procedures and authorised the debtors (Firestar and others) to take all action necessary, said the court order. The deadline for submitting sealed bids is 19 April and auctions will be conducted on 24 April. The US court will conduct sale hearing on 3 May. Firestar had sought to complete closure of the sale by first week of May in view of an important jewellery industry trade show, JCK. The show is being held during 1-4 June 2018 in Las Vegas.
“The JCK show serves as a platform to launch product lines for the fourth quarter, which is traditionally the strongest quarter for sales in the jewellery industry, like many others. If the proposed sale is consummated in the first week of May, a purchaser will have sufficient time to prepare the product lines currently owned by the debtors for the JCK show," the company had said in the motion.