Gitanjali Edges Toward Liquidation

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)