How SBI, ICICI Bank will get Mehul Choksi led Gitanjali Gems to pay its Rs 6000 cr debt

Bankers are taking disgraced Gitanjali Gems, promoted by fugitive diamantaire Mehul Choksi, to insolvency resolution under the National Company Law Tribunal (NCLT) after exploring the possibilities of recovering their dues via the Debt Recovery Tribunal, multiple people in know of the development told DNA Money.

ICICI Bank and State Bank of India (SBI) have taken initial steps for selecting reputed resolution professionals who can be given the task of handling the whole insolvency resolution process, including selecting a prospective buyer for once a leading jewellery and diamond brand, according to the two resolution professionals who had responded to Expressions of Interest (EoIs) separately floated by these bankers.

“We had bid responding to the EoI floated by ICICI Bank. But since the resolution process would be much complex involving multi-dimensional skills considering the nature of the fraud and assets involved, we had bid a price which was reasonable and higher than the lowest price,” a reputed resolution professional, who has handled resolution cases involving possible frauds, said.

ICICI Bank is the lead banker for Gitanjali Gems which has a combined debt of Rs 6,000 crore.

State Bank of India, too, is following ICICI Bank’s footsteps and has taken initial steps for selecting a resolution professional.

“State Bank of India has told resolution professsionals like us that they would like to go for the insolvency process for Gitanjali Gems and has invited EoIs to which we have responded and quoted our fees by one of our partners,” Anil Goel of AAA Insolvency Professionals LLP told DNA Money.

The initial process of selection of resolution professional has begun, to be followed by technical and financial bids, he said.

“What we understand is that Gitanjali Gems would be a complex resolution process as Enforcement Directorate and other agencies are involved,” said Goel, who is handling a similar case involving resolution of Rei Agro whose promoters are now behind bars on charges of fraud and cheating banks.

There appears to be a change in strategy for bankers like ICICI Bank, which were earlier depending on the Debt Recovery Tribunal or selling mortgaged assets through Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, or Sarfaesi Act. Lenders had earlier ordered forensic audit of the books of Gitanjali Gems, which has now been completed, sources said.

Meanwhile, an Enforcement Directorate investigation has found that Choksi diverted over Rs 3,250 crore funds, allegedly defrauded from a PNB branch in Mumbai, to foreign shores and he was in business of “highly inflating” prices of precious metals sold from his outlets. In its chargesheet, the Enforcement Directorate has said Choksi allegedly diverted $56.12 million of loan funds to Nirav Modi and about $50 million to Modi’s father Deepak Modi.

Source: DNA Money