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Leading diamond supplier on the brink of bankruptcy

March 15, 2019 06:58 AM


Leading diamond supplier on the brink of bankruptcy
Antwerp court rejects Eurostar Diamond Traders’s plea for judicial reorganisation, says it has no viable future
Ajit Joshi
TWEETS @MumbaiMirror

Antwerp-based Eurostar Diamond Traders, one of the largest diamond polishing companies in the world which has debts of around $500 million, could soon be forced to file for bankruptcy.

On February 28, a Belgian court reportedly rejected its request for a judicial reorganisation on the grounds that it no longer has tradable diamond assets and, therefore, no viable future.

Reorganisation is a process that involves the restatement of assets and liabilities, as well as holding talks with creditors in order to make arrangements for maintaining repayments.

The Antwerp Court of Appeal also denied its request for protection from creditors, which include Bank of India, ABN Amro and Standard Chartered, as it questioned some of the financial data the company had presented. In September last year, Eurostar had claimed that it had diamond reserves worth $148.8 million, but two months later, it admitted in court that the reserves were valued at only $25 million.

According to Belgian newspaper De Tijd, the court observed that financial institutions appear to have lost faith in the company. It also held that the company “no longer has marketable diamonds” and “was no longer able to function normally”. Eurostar has not been considered a financially viable business after losing the status of supplier to leading diamond company De Beers last year.

“Eurostar has lost the trust of its most important creditors—ABN Amro, Standard Chartered, KBC Bank and Bank of India—and is indebted to them for huge sums of money,” the court judgment said, according to De Tijd.

Eurostar’s current sources of income are highly restricted, and its auditor has reportedly rejected its 2017 accounts. According to provisional administrators, it no longer earns income through traditional activities, with the exception of some rents and money transfers in Hong Kong.

The court is likely to decide next week whether to force it into bankruptcy, said the news report.

Eurostar, which is said to have an annual turnover of $226 million, was founded in 1970 by Kaushik Mehta, whose family is counted among the top 100 richest business families in Belgium. It has offices in India, Botswana, China, Hong Kong and the United Arab Emirates.

Pramod Agarwal, chairman of Gem and Jewellery Export Promotion Council, which is supported by the ministry of commerce and industry, said the council is mulling over taking legal course to banning it from trading in India

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