India fraud probe drove Modi’s jeweller to US bankruptcy filing

Bloomberg

The international jewellery business that’s part of the empire controlled by Nirav Modi, the billionaire accused of masterminding India’s biggest bank fraud, was driven towards US bankruptcy protection after Indian authorities began seizing and freezing assets.
The company’s attorney outlined that background at a Manhattan federal bankruptcy court hearing. Modi, the chief executive officer of the parent company of the jeweller Firestar Diamond Inc., is under investigation for an alleged $2 billion fraud in India. Firestar isn’t linked to the complaints filed by authorities, the company said last month. Still, the seizure of assets took its toll.
“That had a dramatic and sudden impact on the operations of the US companies,” said Ian Winters of Klestadt Winters Jureller Southard & Stevens LLP in the hearing on behalf of Firestar Diamond. Two holding companies and Modi are guaranteeing an existing revolving credit facility with Israel Discount Bank, according to a filing.
Israel Discount didn’t immediately respond to a request for comment. Modi has been accused along with Mehul Choksi of defrauding Punjab National Bank. PNB alleges that the duo and their associates worked with some rogue employees and used fake guarantees to obtain loans from abroad.
Supply chains were disrupted for the wholesale jeweller and its affiliates after Indian authorities shut certain factories that provided most of the company’s products, and this affected customers and employee confidence, Winters told the court.