MUMBAI: The Mumbai bench of the National Company Law Tribunal on Wednesday allowed to initiate insolvency proceedings against Zee Entertainment Enterprises. The court appointed Sanjay Kumar Jhalani as the interim resolution professional.
“In the petition filed by Indusind Bank against the company under Section 7 of the Insolvency & Bankruptcy Code, 2016, the National Company Law Tribunal, Mumbai Bench (NCLT) has pronounced its order dated February 22, 2023 admitting the company to corporate insolvency resolution process under the provisions of the Code,” said Zee Entertainment Enterprises in a filing to the Bombay Stock Exchange on Wednesday.
This comes after the bank in its plea before the NCLT claimed a default of Rs 83.08 crore against the media and entertainment firm. Under Section 7 of IBC, a financial creditor may move NCLT for initiation of CIRP over default of Rs 1 crore and above.
According to the filing, ZEEL is a party to the Debt Service Reserve Account (DSRA) Guarantee Agreement entered into with IndusInd Bank for the term-loan facility advanced to another Essel Group firm, Siti Networks Ltd.
Zee Entertainment is in the middle of a merger with Culver Max Entertainment Pvt., an indirect, wholly owned subsidiary of Sony Group Corp. Board of directors of Zee Entertainment Enterprises Ltd (ZEEL) on December 22 last year had approved the merger with Sony Pictures Networks India. As per the deal, Sony would invest $1.575 billion and hold a 52.93% stake in the merged entity and Zee will have the remaining 47.07%.
Last month, Axis Bank’s subsidiary Axis Finance had threatened legal action against Subhash Chandra and Punit Goenka, MD and CEO, Zee Entertainment including opposing merger between Zee and Sony Pictures Network India.
Private lender IDBI bank had also moved the NCLT against Zee seeking insolvency proceedings to recover dues of Rs 149.60 crore in mid-December last year. As per a regulatory update from the media major, the claim has been disputed by Zee.
Zee Entertainment is also at loggerheads with its largest shareholders Invesco and OFI Global China Fund.
The shareholders are seeking removal of Punit Goenka and appointment of six new independent directors.
Rs 83 cr cr default claim against ZEEL
This comes after Indusind Bank in its plea before the National Company Law Tribunal (NCLT) claimed a default of Rs 83.08 crore against the media and entertainment firm. Under Section 7 of IBC, a financial creditor may move NCLT for initiation of CIRP over default of Rs 1 crore and above