The National Company Law Appellate Tribunal (NCLAT) on Friday stayed the insolvency proceedings against broadcaster Zee Entertainment Enterprises Ltd (ZEE).
Hearing an urgent petition filed by Punit Goenka, managing director and chief executive of ZEE, an appellate bench headed by Justice Ashok Bhushan and Justice Barun Mitra directed IndusInd Bank, a financial creditor, which had initiated the bankruptcy petition, to asked to file his reply. ,
On Wednesday, the National Company Law Tribunal (NCLT), the dedicated bankruptcy court, admitted ZEE into insolvency proceedings on a plea by IndusInd Bank under Section 7 of the Insolvency and Bankruptcy Code (IBC).
“We respect the decision taken by the NCLAT and are committed to protect the interests of all stakeholders,” Goenka said on Friday. “We remain focused on timely completion of the proposed merger.” ZEE is currently undergoing a merger with Culver Max Entertainment, formerly Sony Pictures Networks India.
The tribunal had also accepted a similar bankruptcy petition against Essel Group company Citi Networks.
The matter pertains to a loan availed by Citi, in which ZEE was the guarantor of the loan pursuant to a loan servicing reserve account guarantee agreement dated August 29, 2018.
Arguing for Goenka, senior advocate Mukul Rohatgi said that ZEE had given a special guarantee, not for the loan of City Networks, but only to maintain the shortfall in only one installment of the interest payment account. “ZEE is the corporate guarantor, not the principal borrower. The lead borrower is Citi Networks. The entire amount of debt of City Networks is not recoverable from ZEE. The demand on ZEE can be raised only if City Networks fails to keep one installment of the interest payment.”
“Want 83 crore is the principal amount given to City Networks. ZEE never issued a guarantee for the loan, and the recovery of the loan should be through the Debt Recovery Tribunal and not through the Insolvency Code,” he said.
The Appellate Tribunal was also informed that, substantively, no arguments were heard by the NCLT on initiation of insolvency proceedings against ZEE.
In 2021, IndusInd Bank approached the Delhi High Court for the first time. Last February, it filed a case against ZEE in the NCLT under the corporate insolvency resolution process, claiming default of over Rs. 90 crores. The Delhi High Court delivered its verdict on the petition last September, making it clear that it had not restrained IndusInd Bank from bringing ZEE before the bankruptcy court. This cleared the way for the private lender to file a bankruptcy petition against the media business, to claim City Networks for recovery of the debt.
Meanwhile, a circular issued by NSE on Friday said that the media firm has been delisted from the F&O segment.
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