A Singapore court appointed KPMG restructuring executives to take charge of Radiant World on Thursday, granting an application by creditor Mizuho Bank Ltd., which has accused the trader of alleged fraud linked to iron ore receivables.
The decision removes Radiant World founder Pinkesh Nahar’s control over the group’s key operating entity, opening a new chapter in a saga that has gripped the global commodities industry since Bloomberg first reported in July on concerns that it had been using falsified documents to raise money from banks.
KPMG executives Toh Ai Ling, Adrian Chan and Tan Yen Chiaw will be interim judicial managers of Radiant World Corporation Pte., the trader’s key operating entity in Singapore, according to people familiar with the court’s decision, which was communicated on Thursday.
Read more: Allianz, Zurich Say They Have No ‘Material Exposure’ to Radiant
Under judicial management, an independent administrator is appointed by the court to take control of a company in financial distress, with the aim of rehabilitating it or allowing the creditors to reach a compromise. Interim judicial management is a first step in the process, typically taken by creditors as they seek to preserve assets.
KPMG, Mizuho and Radiant World did not immediately respond to requests for comment. Mizuho’s lawyers at Shook Lin & Bok declined to comment.
Under interim judicial management, Radiant World’s executives no longer have operational control, while creditors will have to refrain from further action.
The independent managers will now work on proposals on the company’s future that will be presented to creditors for a vote. Radiant World has disclosed $870 million outstanding to six creditors who financed its receivables, including Jefferies Financial Group Inc., Intesa Sanpaolo SpA and Deutsche Bank AG, Bloomberg has previously reported.
Thursday’s decision marks a significant escalation in the crisis surrounding Radiant World, once a major participant in the iron ore trade. Mizuho is suing the trader over $97.3 million in receivables purportedly arising from iron ore sales to Glencore International AG, according to a court filing obtained by Bloomberg News.
The bank said in the filing that it had strong reasons to believe that it was the victim of a fraud perpetrated by Radiant World. When it contacted Glencore in August to verify the receivables it had bought, Glencore told the lender that the underlying transactions and the invoices Mizuho believed it was financing did not exist.
Moreover, an email that Radiant World forwarded to Mizuho, purportedly from a Glencore operations executive, had been “generated fraudulently,” Glencore told Mizuho.
Radiant World has denied all wrongdoing.
In filings in preparation for the Singapore hearing, Radiant World’s founder Nahar had argued that the company was solvent because it had over $1 billion of assets on its balance sheet. A Bloomberg analysis suggests that the vast majority of that was money Radiant World said it was owed by companies that either denied owing it anything, were closely related, or were a series of obscure entities in the Middle East.
Photograph: KPMG logo; photo credit: Sean Gallup/Getty Images
Related:
- Obscure UAE Firms Hold Key to Radiant’s $1 Billion in Assets
- Radiant World Seeks $2 Billion From Glencore in Lawsuit
- Mizuho $100M Credit to Radiant World Secured by Allegedly Invalid Invoices: Documents
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