On December 6, a three-member bench of the National Company Law Appellate Tribunal (NCLAT) is slated to hear IDBI Bank’s plea to commence insolvency proceedings against Zee Entertainment.
The matter was previously scheduled for a hearing on November 8 but was postponed to allow completion of pleadings, as per a PTI report.
The Case: IDBI Bank has challenged the ruling of the Mumbai bench at the National Company Law Tribunal (NCLT), which, on May 19, 2023, dismissed the insolvency plea against a prominent media firm, citing Section 10A of the Insolvency & Bankruptcy Code (IBC).
According to NCLT’s order, ZEEL, acting as the corporate guarantor for Siti Networks’ loan from IDBI Bank, defaulted within the timeframe specified in Section 10A of the IBC. Section 10A prohibits the initiation of a corporate insolvency resolution process (CIRP) against any debtor for defaults occurring after March 25, 2020, for one year—a provision introduced by the government to support companies post-lockdown as economic activities gradually resumed.
NCLT underscored that Section 10A permanently bars the filing of applications under Sections 7, 9, and 10 of the Code for defaults between March 25, 2020, and March 25, 2021.
Siti Networks, borrowing ₹150 crore for a working capital facility, was obligated to maintain a Debt Service Reserve Account (DSRA) as per the agreement. A default occurred in maintaining this account.
On March 5, 2021, IDBI Bank invoked the guarantee provided by ZEEL, demanding ₹61.97 crore plus interest from February 18, 2021, totaling ₹149.60 crore in default.
Furthermore, IDBI Bank is contesting ZEE’s merger with Culver Max Entertainment (formerly known as Sony Pictures Networks India), which received approval from an NCLT bench in Mumbai. This legal challenge by IDBI Bank is presented in a separate petition.
