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Gitanjali Edges Toward Liquidation

Creditors reject jeweler’s recovery plan.
Apr 18, 2019 9:42 AM   By Rapaport News
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RAPAPORT... Gitanjali Gems, whose chairman is a suspect in India’s largest bank fraud, is expected to go into liquidation, after its lenders rejected a recovery plan.

Creditors voted by a 54% majority on March 28 not to extend Gitanjali’s “corporate-insolvency resolution process,” a six-month window during which a company’s ability to repay its debts is assessed. That process therefore lapsed on April 6, according to a filing with the Bombay Stock Exchange earlier this week.

“Since [the] extension is 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,” said Vijay Kumar Garg, who acts as the Indian jeweler’s resolution professional.

Gitanjali’s founder, Mehul Choksi, is on the run, after India’s Punjab National Bank (PNB) alleged that he and his nephew, Nirav Modi, had defrauded it of $2 billion. Choksi is thought to be in Antigua and Barbuda, while police arrested Modi in London last month. The accusations first came to light in January 2018.

Gitanjali owes a total of INR 125.58 billion ($1.81 billion) to 31 banks and other financial institutions, according to another filing by the company. PNB, the largest creditor, claims to be owed INR 55.19 billion ($795.6 million), and was entitled to 44% of the vote.

Image: Mehul Choksi. (Rapaport News)
Tags: Gitanjali, Gitanjali Gems, India, Rapaport News
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