US stops Nirav Modi's firms facing bankruptcy from paying bonus to employees
William K Harrington, the United States Trustee (Region 2), who has objected to the firms' request said, "The objection is two-fold. Court is aware, the ultimate majority shareholder of the debtors, and the founder of Firestar Diamond-Nirav Modi-has been charged by the State Bank of India with criminal conspiracy, fraud and cheating related to the Punjab National Bank".
- May 1, 2018,
- Updated May 1, 2018 8:14 PM IST
Jeweller Nirav Modi's firms, which have filed for bankruptcy in the US, are facing a motion of objection from the United States Trustee for their plan to pay $2,30,000 in bonuses to employees as part of a retention programme, according to an India Today report.
William K Harrington, the United States Trustee (Region 2), who has objected to the firms' request said, "The objection is two-fold. Court is aware, the ultimate majority shareholder of the debtors, and the founder of Firestar Diamond-Nirav Modi-has been charged by the State Bank of India with criminal conspiracy, fraud and cheating related to the Punjab National Bank".
The US Trustee programme is a component of the Department of Justice responsible for overseeing administration of bankruptcy cases and private trustees.
"Impact of [Nirav] Modi's alleged large-scale fraud upon the three debtors here is not yet known and is the subject of an investigation by the Examiner recently appointed in these cases," the statement by US Trustee said.
"At this time, an award of bonuses to employees that may have known or should have known about any fraud on the part of Modi and/or these debtors is premature," the statement added.
The US Trustee said that the "debtors fail to disclose the names, titles, roles and job descriptions of the participants so that the Court and other parties in interest can determine whether the KERP (Key Employee Retention Programme) participants exercise control over significant aspect of the debtors' business or are entitled to indemnification".
"Without this information it is not possible for the Court, the United States Trustee and other parties in interest to determine whether any of the KERP participants are insiders and whether the proposed bonus plans should be evaluated under Section 503(c)(1)," the US Trustee said.
On February 26, Firestar Diamond and its two affiliates -Fantasy Inc and A. Jaffe Inc filed for bankruptcy protection in the US through a voluntary petition, stating supply chain disruption.
On March 29, the US court allowed Nirav Modi firms to sell their assets. The auction of assets will begin on May 5.
Earlier, the US Bankruptcy Court in southern New York was to hear the matter on May 2 but the hearing has deferred to May 15 following a request from Nirav Modi's firms.
Jeweller Nirav Modi's firms, which have filed for bankruptcy in the US, are facing a motion of objection from the United States Trustee for their plan to pay $2,30,000 in bonuses to employees as part of a retention programme, according to an India Today report.
William K Harrington, the United States Trustee (Region 2), who has objected to the firms' request said, "The objection is two-fold. Court is aware, the ultimate majority shareholder of the debtors, and the founder of Firestar Diamond-Nirav Modi-has been charged by the State Bank of India with criminal conspiracy, fraud and cheating related to the Punjab National Bank".
The US Trustee programme is a component of the Department of Justice responsible for overseeing administration of bankruptcy cases and private trustees.
"Impact of [Nirav] Modi's alleged large-scale fraud upon the three debtors here is not yet known and is the subject of an investigation by the Examiner recently appointed in these cases," the statement by US Trustee said.
"At this time, an award of bonuses to employees that may have known or should have known about any fraud on the part of Modi and/or these debtors is premature," the statement added.
The US Trustee said that the "debtors fail to disclose the names, titles, roles and job descriptions of the participants so that the Court and other parties in interest can determine whether the KERP (Key Employee Retention Programme) participants exercise control over significant aspect of the debtors' business or are entitled to indemnification".
"Without this information it is not possible for the Court, the United States Trustee and other parties in interest to determine whether any of the KERP participants are insiders and whether the proposed bonus plans should be evaluated under Section 503(c)(1)," the US Trustee said.
On February 26, Firestar Diamond and its two affiliates -Fantasy Inc and A. Jaffe Inc filed for bankruptcy protection in the US through a voluntary petition, stating supply chain disruption.
On March 29, the US court allowed Nirav Modi firms to sell their assets. The auction of assets will begin on May 5.
Earlier, the US Bankruptcy Court in southern New York was to hear the matter on May 2 but the hearing has deferred to May 15 following a request from Nirav Modi's firms.