NCLAT to hear IDBI Bank’s appeal against Zee Entertainment on Aug 31

The National Company Law Appellate Tribunal (NCLAT) on Thursday said that it would hear the plea by IDBI Bank on August 31 seeking insolvency proceedings against Zee Entertainment to recover dues of Rs 149.6 crore.

This comes months after the National Company Law Tribunal dismissed all objections in the merger case and approved the merger of Zee Entertainment and Sony India.

The NCLT, in its verdict on May 10, noted that it can’t entertain IDBI’s plea as it was barred under Section 10A of the Insolvency and Bankruptcy Code (IBC).

Section 10A states that no application for initiation of corporate insolvency resolution process (CIRP) can be filed against any debtor by any financial and operational creditor for any default arising on or after March 25, 2020, for a period of one year.

IDBI Bank had filed the plea in December 2022 before the Mumbai bench. IDBI Bank filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, claiming to be a financial creditor, before NCLT for initiation of the Corporate Insolvency Resolution Process against the company.

IDBI Bank’s claim is based on Zee’s debt service reserve account (DSRA) guarantee. The public sector lender alleged ZEE provided to secure loans provided by IDBI Bank to Siti Networks Ltd — both were part of Essel Group.

IDBI Bank insisted before the NCLT that its claim is identical to that of IndusInd Bank and on that ground, the application must be permitted.

IndusInd Bank had filed a similar plea against ZEE, which was admitted by the NCLT on February 22.

However, the National Company Law Appellate Tribunal (NCLAT) granted relief against the NCLT order to the media company. Later in March, ZEE entered into a settlement agreement with IndusInd Bank.

On August 11, NCLT approved the merger of Zee Entertainment Enterprises Ltd and Culver Max Entertainment (erstwhile Sony Pictures Networks India or SPNI).

Zee and Sony inked a definitive agreement at the end of 2021, to combine the television network networks of both apart from digital assets, product operations and program libraries. After the merger, Sony’s shareholders will hold 50.86 per cent of the combined entity, while Zee’s promoters will hold 3.99 per cent, ZEEL’s shareholders will hold the remaining 45.15 per cent.

At 2 PM, shares of Zee Entertainment were trading at Rs 273.05, down by 1.07 per cent.

Zee has been facing many hurdles in terms of its operations. On Monday, the Securities and Exchange Board of India (Sebi) barred Zee’s promoters Punit Goenka and Subhash Chandra from boardrooms of four Zee group companies, including Zee Entertainment Enterprises Ltd. The other three Zee group companies include – Zee Media Corporation, Zee Media Corp and Zee Aakash News. This is a slight variation of its previous order where SEBI had barred the duo from company boards.

It also said it will complete investigations against them within eight months.

Sebi said Chandra and Goenka cannot be directors in any entity which is formed after merger, amalgamation of the four companies, which will impact Goenka’s directorship post merger of Zee and Sony. Business Today