The National Company Law Appellate Tribunal (NCLAT) has adjourned its hearing to December 6, 2023, regarding IDBI Bank’s plea to initiate insolvency proceedings against Zee Entertainment Enterprises Limited (ZEEL). The rescheduling was due to an adjournment request from the counsel needing more time for pleading. The hearing was initially scheduled for November 8, 2023.
The conflict between IDBI Bank and ZEEL started in 2019 when the bank filed an insolvency petition against ZEEL for loan repayment defaults. This dispute escalated when IDBI Bank invoked ZEEL’s guarantee following Siti Networks’ default on a working capital facility loan on March 5, 2021. As per Debt Service Reserve Account (DSRA) terms, IDBI Bank was obligated to pay Rs 61.97 crore plus additional interest from February 18, 2021. In default of these loan repayment obligations, it demanded a sum of Rs 149.60 crore from ZEEL, acting as a corporate guarantor.
However, the Mumbai branch of the National Company Law Tribunal (NCLT) dismissed IDBI Bank’s insolvency plea against ZEEL on May 19, 2023. This dismissal was based on Section 10A of the Insolvency and Bankruptcy Code (IBC), a clause introduced to assist businesses in restarting post-lockdown economic activity. This law prohibits insolvency proceedings for defaults that occurred between March 25, 2020, and March 25, 2021.
In response to this dismissal, IDBI Bank challenged NCLT’s bar in a plea heard by NCLAT on November 8, 2023. ZEEL contested this and moved to the NCLAT to contest the proceedings initiated by IDBI.
On the same day, NCLAT also rescheduled IDBI Bank’s protest against the merger between ZEEL and Culver Max Entertainment, previously known as Sony (NYSE:) Pictures Networks India. This merger, destined to create India’s largest media entity, was initially greenlit in December 2021 and secured regulatory validations from NSE, BSE, SEBI, and the Competition Commission of India. Despite these approvals, IDBI Bank together with Axis Finance objected to it subsequent to its sanction by the National Company Law Tribunal in August. The details of this challenge are yet to be disclosed.
Meanwhile, Mumbai’s NCLT panel approved ZEE’s merger with Culver Max Entertainment, formerly Sony Pictures Networks India. The matter went through various legal channels, including the NCLT which initially admitted the insolvency plea.
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