Majors

A. Jaffe, Firestar Diamond File Bankruptcy

MajorsFeb 28, 2018

A. Jaffe, Firestar Diamond File Bankruptcy

They are the U.S. companies connected to Nirav Modi, the diamantaire accused of defrauding an Indian bank out of billions.

One of A. Jaffe’s map pendants in 14-karat gold with a diamond. A. Jaffe, along with affiliate company Firestar Diamond Inc., filed for Chapter 11 bankruptcy protection Monday, part of the fallout from the billion-dollar bank fraud scam involving Nirav Modi.

New York--The U.S. companies connected to Indian diamantaire Nirav Modi filed for bankruptcy protection Monday in New York.

In separate but nearly identical filings, affiliate companies Firestar Diamond Inc. and A. Jaffe Inc. stated that filing Chapter 11 was in their best interest after reviewing the “liquidity and supply challenges” they face. Affiliate company Fantasy Inc. also filed Chapter 11.

Modi and his uncle, Gitanjali Managing Director Mehul Choksi, are accused of scamming Punjab National Bank (PNB) out of $1.8 billion--allegations both have denied.

Though Modi, who left India in January, is reportedly refusing to return to the country, the government has taken action in an effort to recoup money for the state-owned bank, seizing paintings, property and jewels belonging to the billionaire.

Authorities also shut down the factories that were the primary suppliers of merchandise to Firestar Diamond and A. Jaffe, essentially cutting off the companies’ supply, said Ian Winters, the New York attorney representing all three companies.

He said Chapter 11 provides the companies with the best forum to continue to operate; it provides reassurance to suppliers that they are going to be get paid and to customers that they are going to continue to receive merchandise, while also giving the companies transparency and protection.

(Firestar, Fantasy and A. Jaffe are not the first diamond companies with overseas ties to seek the protections afforded by bankruptcy in the U.S. Antwerp-based diamond company Exelco filed Chapter 11 in Delaware after withdrawing its case in Belgium in order to block lender KBC Group NV from seizing and liquidating its assets overseas.)

RELATED CONTENT: Nirav Modi Case Is ‘Another Nail in the Coffin’
Firestar Diamond/Fantasy Inc. and A. Jaffe issued separate statements following their Chapter 11 filings.

In its statement, Firestar/Fantasy noted it expects to still be able to fulfill orders, pay vendors and “do business as they have always been doing” during the bankruptcy process.

Meanwhile, A. Jaffe said that while it is aware of the “unfortunate allegations of financial improprieties overseas,” its core team in the United States was not in any way involved with any of the alleged conduct. Winters pointed out that Modi was not an officer or a director in any of the three U.S. companies and was not involved in their day-to-day operation.

A. Jaffe did note, however, that there will be “some disruption” in supply over the next 30 days because it now must do all of its manufacturing in New York.

As
of Wednesday morning, its website, where certain items are sold direct to consumers, read: “Due to manufacturing limitations, there may be production delays with your order.”

A. Jaffe, which has been in the jewelry business since 1892 and is known for its engagement rings and personalized map pieces, is looking for another investor, while Firestone Diamond/Fantasy is looking for a buyer.

Winters said there have been “serious expressions of interest” for all of the companies.

The Chapter 11 petitions were filed in the U.S. Bankruptcy Court for the Southern District of New York and list an equal amount of estimated assets and estimated liabilities for both: between $10 and 50 million.

Firestar Diamond stated in its filing that it was formerly known as both Firestone Inc. and Next Diamond Inc.

A. Jaffe Inc. lists Sandberg & Sikorski Corp. as an F/K/A, and also lists itself as doing business as (D/B/A) Sandberg & Sikorski, Firestar Fine Jewelry and Preferred 105.
Michelle Graffis the editor-in-chief at National Jeweler, directing the publication’s coverage both online and in print.

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