Gitanjali Gems headed for liquidation

The committee of creditors to Gitanjali Gems, promoted by fugutive Mehul Choksi, has decided to liquidate the company to recover ₹ 12,558 crore it owes to 31 banks and financial institutions.

Choksi along with diamantaire Nirav Modi, are on the run since early last year after they misused credit facilities of banks and defaulted on loan repayment. Almost all the investigative agencies of the country are probing the multi-million scam perpetrated by Modi and Choksi together.

On Tuesday, Vijay Kumar Garg, the resolution professional of the company, informed the stock exchanges that the 180-day of Corporate Insolvency Resolution Process ended on April 6 and since the extension was not approved by the committee of creditors, the next logical step in the Corporate Insolvency Resolution Process would be to go for liquidation of the company.

Resolution rejected

The Committee of Creditors of Gitanjali Gems in their fifth meeting held on March 28 rejected the resolution seeking extension of CIRP process with 54 per cent of votes.

Punjab National Bank, which accounts for 44 per cent of the voting rights, has the highest exposure of ₹5,518 crore, while ICICI Bank with outstanding dues of ₹890 crore, has seven per cent voting rights.

Last October, the National Company Law Tribunal admitted the insolvency petition filed by ICICI Bank against Gitanjali Gems under the Insolvency and Bankruptcy Code.

In March this year, the National Company Law Appellate Tribunal stayed an order allowing the Enforcement Directorate to attach the assets of Gitanjali Gems after ICICI Bank argued that this was preventing the progress of bankruptcy proceedings.

A Special Court under Prevention of Money Laundering Act had issued non-bailable arrest warrants against Choksi, his nephews Nirav Modi and Neeshal Deepak Modi, owner of Firestar Diamonds in March 2018.

They allegedly colluded with two employees of Punjab National Bank, the country's second-largest state-owned lender, to defraud the bank.

At least six PNB staff and equal number of Choksi and Modi employees have been arrested so far.

Interestingly, Choksi has protested his innocence in an open letter late last year. The Enforcement Directorate had attached 41 properties worth about ₹1,210 crore owned by Choksi and his associated firms.

For detailed coverage: PNB Scam