New Delhi: The National Company Law Appellate Tribunal (NCLAT) has decided to postpone the hearing of IDBI bank’s plea against Zee Entertainment until August 17. The private lender has challenged an NCLT order issued on May 19, which rejected its request to initiate insolvency proceedings against the media giant.
During the hearing on Wednesday, the lawyers requested an adjournment. In response, the NCLT bench, headed by Chairperson Justice Ashok Bhushan and Member Barun Mitra, deferred the matter until August 17.
The Mumbai bench of the National Company Law Tribunal (NCLT) had previously rejected the bank’s plea for insolvency against Zee Entertainment on May 19, 2023. They stated that this plea was not allowed under Section 10A of the Insolvency & Bankruptcy Code (IBC).
According to the NCLT bench’s ruling, Zee Entertainment Enterprises Ltd (ZEEL), which served as the corporate guarantor for Siti Networks’ loan from IDBI Bank, had defaulted. However, this default occurred within the timeline specified under Section 10A of the IBC.
Section 10A prevents any financial or operational creditor from filing an application for corporate insolvency resolution process (CIRP) against any debtor for defaults that arose on or after March 25, 2020, for a period of one year. This provision was added by the government in the IBC to assist companies after economic activities resumed following the lockdown. The NCLT clarified that Section 10A absolutely and permanently bars the filing of any application under Sections 7, 9, and 10 of the Code for defaults committed from March 25, 2020, to March 25, 2021.
Siti Networks had taken a loan of Rs 150 crore for a working capital facility, and according to the agreement, they were required to maintain a Debt Service Reserve Account (DSRA).
On March 5, 2021, IDBI Bank invoked the guarantee provided by ZEEL and demanded payment of Rs 61.97 crore, along with additional interest from February 18, 2021. The bank claimed a total default amount of Rs 149.60 crore.
ZEEL contested this, arguing that its guarantee imposes limited and restricted liability on the guarantor, and therefore, it cannot be held liable for the entire debt in the event of a default by Siti Bank.
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Basant Kasayap is an entertainment aficionado who delves into the glitz and glamour of the entertainment industry. From Hollywood to Bollywood to regional cinema, she offers readers an insider’s perspective on the world of movies, music, and pop culture.
