NEW DELHI: In a fresh trouble for Zee Entertainment Enterprise Ltd, IDBI Bank has filed an insolvency application with the Mumbai bench of the National Company Law Tribunal (NCLT) for defaulting on a payment of Rs 149.60 crore.
The company in an exchange filing on late Wednesday night said that the bank’s ‘purported claim arises under a Debt Service Reserve Agreement entered into by the bank and the Company for the financial facility availed by Siti Networks Limited.
Zee Entertainment has said that it ‘vehemently’ disputes IDBI Bank’s claim in other proceedings filed by the bank against the company for recovery of its alleged dues. Once the insolvency application has been filed, NCLT has to admit it before insolvency proceedings could begin against Zee Entertainment. However, if Zee could establish at NCLT that the said outstanding amount is in dispute then NCLT may not admit IDBI Bank’s insolvency petition against the company.
Often creditors use insolvency petition against a company as a recovery tool. Threatened with the prospect of losing the company if NCLT admits the insolvency plea, promoters often hurry on to settle dues of creditors. Zee Entertainment and its subsidiary Dish TV have been mired in many controversies including tussles with shareholders.
Foreign institutional investor Invesco Group, which owned 18% in the company, had tried ousting ZEEL MD and CEO and even tried blocking its deal with Sony Pictures India. While Invesco could not succeed in either, Zee group company Dish TV was not so lucky. Yes Bank, the largest shareholder in Dish TV, forced the company’s chairman Jawahar Lal Goel to step down.