The National Company Law Appellate Tribunal (NCLAT) is set to hear the IDBI bank’s plea against Zee Entertainment related to insolvency proceedings on Thursday.
“Learned Counsel for Appellant prays for and is allowed a week’s time to file the Additional Affidavit,” said the NCLAT bench, comprising Chairperson Justice Ashok Bhushan and Member Barun Mitra, reported PTI.
Also read: SAT expresses concern over Sebi’s decision on Goenka’s role in Zee group
In its plea, the IDBI bank had challenged the orders of the Mumbai bench of the NCLT, which rejected the private lender’s plea to begin the insolvency proceedings against Zee Entertainment Enterprises Ltd.
Last week, the Mumbai bench of NCLT had given a green signal to the merger of ZEE with Culver Max Entertainment (earlier known as Sony Pictures Networks India). Before NCLAT, IDBI had challenged the NCLT order passed in May this year. Under its plea, the private lender had sought insolvency against media major Zee entertainment, observing that it was barred under Section 10A of the insolvency and Bankruptcy Code (IBC).
In its order, the NCLT bench had said that ZEEL, the corporate guarantor for the loan availed by Siti Networks — the principal Borrower of IDBI Bank — has committed a default. The default was committed during the timeline specified under section 10A of the IBC.
Also Read: Zee-Sony case: Punit Goenka moves SAT against Sebi order
Section 10A makes it mandatory 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, reported PTI.
This was a special provision inserted by the government in the IBC to help the companies after the economic activities had resumed post-lockdown in phases.
Also Read: MSCI may remove ZEEL from Global Small-cap Index. Nuvama sees $22 million outflow
The NCLT said Section 10A bars absolutely and forever, the filing of any application under Sections 7, 9 and 10 of the Code for defaults committed on or after March 25, 2020, up to March 25, 2021.
Siti Networks has taken a loan of ₹150 crore for a working capital facility. As per the agreement, the company has to maintain a Debt Service Reserve Account (DSRA).
Under DSRA, a credit balance equal to two-quarters of interest on working capital was required to be maintained by Siti Networks at all times till the repayment. But there was a default.
Also Read: NCLT approves $10 bn mega-merger between Zee and Sony
On March 5, 2021, IDBI Bank invoked the guarantee provided by ZEEL and called to pay ₹61.97 crore with further interest from February 18, 2021. It claimed an amount of ₹149.60 crore in default.
The claim was challenged by ZEEL. It mentioned that its guarantee provided for a limited and restricted liability on the guarantor. It also said that it cannot be held liable for the entire debt in caase of default by borrower.
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Updated: 31 Aug 2023, 08:19 AM IST
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