Firestar Diamond trustee seeks OK of accounting services settlement

By Caroline Salls

Pittsburgh, Dec. 26 – Firestar Diamond, Inc. Chapter 11 trustee Richard Levin requested court approval of a settlement reached with Marks Paneth LLP, according to a motion filed Dec. 26 with the U.S. Bankruptcy Court for the Southern District of New York.

Levin said Mark Paneth received fees from the Firestar debtors for audits and other accounting services performed between 2012 and Firestar’s bankruptcy filing date.

After the bankruptcy filing, Firestar hired Marks Paneth to provide continued services in connection with the Chapter 11 cases. Since the bankruptcy filing, the trustee said Marks Paneth has received $495,000 in fees and expenses from the debtors’ estates, and Marks Paneth claims that it is owed additional fees and expenses from the Firestar estates.

In addition, Levin said the company paid Marks Paneth $20,000 on behalf of two of its affiliates, Firestar Diamond International, Inc. and Nirav Modi, Inc. Those funds were supposed to be used as retainers to represent the affiliates in their subsequent bankruptcy cases.

However, Firestar said those entities never filed for bankruptcy, but Marks Paneth still holds the $20,000 in retainer fees.

On Aug. 9, the trustee sent a demand letter for payment by Marks Paneth of more than $1.5 million in damages based on alleged theories of recovery. The demand letter also seeks forfeiture of any additional fees Marks Paneth claims to be owed from the Firestar estates.

“Marks Paneth vigorously disagrees with the validity of the claims raised in the demand letter,” the settlement motion said.

Under the proposed settlement, Marks Paneth will pay the trustee $125,000 and return the $20,000 in retainer fees.

Marks Paneth also agreed to waive any remaining fees and expense still owed solely from the Firestar debtors’ estates.

The hearing is scheduled for Jan. 22.

Firestar Diamond is a subsidiary of Mumbai-based diamond manufacturer Firestar International Pvt. Ltd. The company filed for bankruptcy on Feb. 26, 2018 under Chapter 11 case number 18-10509.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.