MUMBAI: In a big relief for Zee Entertainment Enterprises Ltd (ZEEL), the National Company Law Appellate Tribunal (NCLAT) on Friday stayed the insolvency proceedings initiated against it earlier
this week.The appellate tribunal issued notice to IndusInd Bank on plea by Zee CEO and Managing Director Punit Goenka said it will hear the case on March 29.
“We respect the decision taken by NCLAT and remain committed towards protecting the interest of all stakeholders. Our focus continues to be on the timely completion of the proposed merger (Culver Max Entertainment),” said Goenka in a statement.
On Wednesday, the Mumbai bench of the NCLT had admitted a plea filed by IndusInd Bank to initiate insolvency proceedings and had appointed Sanjeev Kumar Jalan as the interim resolution professional in the matter. The matter pertains to a default of `89 crore by Essel Group’s multisystem operator arm Siti Networks claimed by IndusInd Bank, for which ZEEL was a guarantor.
The NCLAT order is a major reprieve for ZEEL, which is merging with rival Culver Max Entertainment, formerly known as Sony Pictures Networks India, creating India’s biggest media empire. The company has received necessary approvals from shareholders, creditors, bourses and CCI and a final go-ahead from NCLT is awaited.
During the proceedings, senior advocate Mukul Rohatgi representing ZEEL submitted that insolvency was initiated against the media firm for being a corporate guarantor for a loan provided to Siti Networks. Terming it a ‘comedy of errors’, Rohatgi told NCLAT that ZEEL was ‘not a regular guarantor’ of the loan under which a comfort amount was to be maintained in the Debt Service Reserve Account (DSRA) for payment of the interest.
According to him, ZEEL had not given a special guarantee for the debt. The guarantee was given only if Siti Networks doesn’t maintain one tranche of interest comfortably.