Union Bank, Bank of India seek to be party to Nirav Modi-owned Firestar Diamond's US case

MUMBAI: Union Bank and Bank of India have jointly approached a US court, seeking its approval to participate in the proceedings under the Chapter 11Bankruptcy filing of Nirav Modi-owned Firestar Diamond.

Through US law firm Hill Rivkins, the state-run banks have sought appearance opportunities and copies of the notices served and papers filed in the case. ET has seen a copy of the application. The banks didn’t respond to emails seeking comment.

Under Chapter 11 of the US Bankruptcy Code, companies are given protection from creditors as they try to reorganise their business with a court monitoring the process.

As part of the process, if an entity, like the Indian banks in this case, believes it has an “interest” or a claim in the case, it could file for appearance and request for service of notices and papers through an attorney.


This way, it is asking to be copied on all correspondences related to the process and for participation in the proceedings.

Nirav Modi, who is being probed by several Indian agencies for illegal transfer of about Rs 13,600 crore from Punjab National Bank, has a majority stake in Firestar Diamond and its sister companies.

Union Bank had revealed that it had a exposure of $300 million (around Rs 1,915 crore) to the PNB fraud case, but that this was fully secured by letters of undertaking and other documents and it was confident to receive the payment.

Bank of India had not revealed any exposure.

“The proactive appearance of Union Bank of India in the Firestar Diamond and A Jaffe Chapter 11 cases seems appropriate in light of the reported $18.4 million direct exposure to Nirav Modi as well as the $300 million related to the PNB bank guarantees,” said Seth Freeman, a certified insolvency and restructuring advisor and managing director of EM Capital Management in San Francisco.

Firestar Diamond filed its Chapter 11 petition in the New York Southern Bankruptcy Court claiming that liquidity and supplychain challenges were to be blamed for its financial situation. The company listed about $100 million in assets and debt. The court has convened a meeting of its creditors in New York on March 30.