Punjab National Bank Ltd. (PNB) has informed the Ministry of Corporate Affairs (MCA), which spearheaded the corporate governance litigation in a foreign jurisdictional court, that it has received $ 3.25 million (Rs. 24.33 crore) as the first tranche of recoveries. Upon liquidation of the debtors’ assets by the US Chapter 11 Trustee, a sum of $ 11.04 million (Rs. 82.66 crore) is available for distribution to unsecured creditors, including PNB. Further recovery is subject to other expenses and settlement of claims of other claimants, the bank release added.
The Ministry has also initiated proceedings for disgorgement of money from perpetrators.
In 2018, PNB informed the Ministry of Corporate Affairs that three companies promoted by Nirav Modi – Firestar Diamond, Inc., A. Jaffee Inc., and Fantasy, Inc. — had filed for Chapter 11 Bankruptcy Protection in the Southern District of New York. PNB requested the MCA to support and join the bankruptcy proceedings in the US in order to help the bank realise its claims in the debtors’ assets.
The US Bankruptcy Court of Southern District of New York, by its order dated July 26, 2018, recognised the claims of PNB in the proceeds of the sale of assets of the properties of the debtor companies. It also authorised PNB to issue subpoenas to compel the examination of Nirav Modi, Mihir Bhansali and Rakhi Bhansali under oath.
On August 24, 2018, the examiner appointed by the New York Bankruptcy Court submitted his report which explained the modus operandi of the fraud, and the manner in which the US-based employees of the debtors participated in the fraud.