NCLAT To Hear IDBI Bank's Appeal In Zee Entertainment Insolvency Case On August 31

The case pertains to Siti Networks borrowing Rs 150 crore for working capital from IDBI Bank, guaranteed by Zee. Siti defaulted on the loan, and IDBI used ZEEL's guarantee

In May, the NCLT rejected a request from IDBI Bank asking for Zee Entertainment's insolvency.

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The National Company Law Appellate Tribunal (NCLAT) has agreed to hear IDBI Bank's appeal against the NCLT's order regarding Zee Entertainment's insolvency case, reported Moneycontrol. The next hearing is scheduled for August 31. IDBI Bank has also asked for a week of extension to submit more documents, as per the report. In May, the NCLT rejected a request from IDBI Bank asking for Zee Entertainment's insolvency.

The case pertains to Siti Networks borrowing Rs 150 crore for working capital from IDBI Bank, guaranteed by Zee. Siti defaulted on the loan, and IDBI used ZEEL's guarantee. However, ZEEL said that default was within Section 10A's timeframe. Section 10A stops insolvency applications by creditors for defaults between March 25, 2020, and one year ahead. NCLT referred to IDBI's demand on March 5, 2021, and explained Section 10A stops such applications for defaults between March 25, 2020, and March 25, 2021.

On Thursday, as per the report, IDBI argued as Zee was the guarantor for the Siti Networks' loan they are bound to move against Zee, and the repayment was not covered under Section 10A. On the other hand, Zee opposed NCLAT issuing any notice to the firm. 

Notably, IndusInd Bank had previously lodged a similar claim against Zee, which the NCLT accepted on February 22. However, the NCLAT subsequently provided relief to Zee against the NCLT's decision. Later, in March, Zee reached a settlement agreement with IndusInd Bank.

As per a Business Today report, IDBI Bank has argued Before NCLT that its claim linked to Zee guarantee is similar to IndusInd Bank. 

Earlier this month, the National Company Law Tribunal (NCLT) dismissed another case related Zee and Sony India merger, where Zee creditors, including Axis Finance, JC Flower Asset Reconstruction Co, IDBI Bank, Imax Corp, and IDBI Trusteeship, raised objections. 

The NCLT approved the merger of Zee Entertainment Enterprises Ltd and Culver Max Entertainment (formerly Sony Pictures Networks India or SPNI).

In a deal finalised at the end of 2021, Zee and Sony agreed to merge their television networks along with digital assets, product operations, and program libraries. Following the merger, Sony's shareholders will hold a 50.86 per cent stake in the combined entity, while Zee's promoters will retain 3.99 per cent, leaving the remaining 45.15 per cent for ZEEL's shareholders.

Zee has encountered operational challenges, with the SEBI barring Zee's promoters, Punit Goenka and Subhash Chandra, from the boards of four Zee group companies, including Zee Entertainment Enterprises Ltd. SEBI has shown its intention to conclude investigations against promoters within eight months.

The other three Zee group companies include - Zee Media Corporation, Zee Media Corp and Zee Aakash News. SEBI said that Chandra and Goenka would be ineligible to serve as directors in any entity formed after the merger or amalgamation of the companies, a ruling that would impact Goenka's directorial role post the Zee-Sony merger.