Bank Of India, Union Bank Claims Against Nirav Modi's American Firms Disallowed

Firestar Diamond‘s Chapter 11 Trustee says banks do not have direct claim against firm

- Radhika Merwin

The Chapter 11 Trustee for Firestar Diamond Inc, A Jaffe Inc and Fantasy Inc — Nirav Modi’s three American entities that had filed for bankruptcy protection in the US after the massive PNB fraud — recently filed objections to the claims of Union Bank of India (UK) and Bank of India (London branch).

Seeking to disallow the claims — $3.2 million filed by the former and about $0.4 million by the latter — the court-appointed Chapter 11 Trustee pointed out that the Indian banks failed to show they are eligible creditors of Firestar Diamond.

“The key problem for Union Bank of India and Bank of India is that while they may have engaged in credit transactions with Modi-controlled entities, the banks making the claims are not direct creditors of the US companies in Chapter 11,” said Seth R Freeman, CIRA, CTP, a bankruptcy expert and Senior Managing Director of GlassRatner Advisory & Capital Group, LLC in San Francisco.

While the Indian banks may have claims against other companies within the Firestar corporate family, they cannot assert their claims against Firestar Diamond in particular (which is under bankruptcy proceedings), according to the Chapter 11 Trustee, Richard Levin, an author of the 1978 US Bankruptcy Code, and one of the world’s foremost bankruptcy lawyers.