NCLAT accepts IDBI Bank's insolvency plea against ZEEL
What's the story
The National Company Law Appellate Tribunal (NCLAT) has admitted IDBI Bank's plea to start insolvency proceedings against Zee Entertainment Enterprises Limited (ZEEL).
This is in relation to unpaid dues of around Rs. 150 crore.
The NCLAT issued a notice to ZEEL and instructed both parties to submit replies, acknowledging that the matter requires consideration. The next hearing is scheduled for October 11.
Details
NCLT decision based on IBC Section 10A challenged
IDBI has challenged the National Company Law Tribunal (NCLT) Mumbai bench's decision to deny insolvency proceedings against ZEEL based on Section 10A of Insolvency and Bankruptcy Code (IBC).
This section does not permit the initiation of insolvency proceedings for defaults occurring during the COVID-19 period, from March 25, 2020 to March 25, 2021.
ZEEL argued that the guarantee was limited and was not covering the entire debt, while IDBI Bank claimed that the default occurred before the Section 10A period.
Legal
ZEEL managed a settlement with IndusInd Bank
The bank claims that the default started from a debt service reserve account (DSRA) guarantee, given by ZEEL to bag loans similar to Siti Networks, both of which were part of Essel Group.
Previously, IndusInd Bank also filed an application against ZEEL, that was accepted by the NCLT but later granted relief by the NCLAT.
ZEEL managed a settlement with IndusInd Bank, contesting both banks' claims mainly on the grounds that the guarantee was invoked during the pandemic.
Insights
Punit Goenka is fighting SEBI order in SAT
In a separate development, Punit Goenka, former ZEEL MD and CEO, has moved the Securities Appellate Tribunal (SAT) in a bid to challenge a confirmatory order given by the Securities and Exchange Board of India (SEBI).
SEBI's order prevented Punit Goenka and his father Subhash Chandra from holding important managerial positions within the Zee group of companies until further notice.