In a serious aid for media main Zee Entertainment Enterprises Ltd. (ZEEL), the National Company Law Appellate Tribunal (NCLAT) on Friday stayed the insolvency proceedings initiated against it earlier this week.
Admitting a petition filed by ZEEL Managing Director and chief govt Punit Goenka, the appellate tribunal issued notices to non-public sector lender IndusInd financial institution and the interim decision skilled, directing them to file a reply in two weeks.
NCLAT mentioned the submissions made by either side want an in depth listening to.
“List the appeal for final disposal on March 29. In the meantime, the order passed by the adjudicating authority on February 22, 2023 remains stayed,” mentioned the NCLAT bench comprising Chairperson Justice Ashok Bhushan and Barun Mitra.
Commenting on the event, Mr. Goenka in a press release mentioned:” We respect the decision taken by NCLAT and remain committed towards protecting the interests of all stakeholders. Our focus continues to be on the timely completion of the proposed merger (Culver Max Entertainment).”
On Wednesday, the Mumbai bench of the National Company Law Tribunal (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”, Mr. Rohatgi told NCLAT that ZEEL was “not an everyday 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.
He also submitted that ZEEL is going through an amalgamation with Culver Max and has all the approvals but the merger will get stuck because of this order.
While senior advocate Rajiv Nayar, representing IndusInd Bank said ZEEL was a “principal debtor” as per the settlement. A money buffer was to be maintained however as a substitute ZEEL was going from one court docket to a different, taking their probability.
IndusInd had approached NCLT claiming a monetary debt of round ₹92 crore. However, this was challenged by ZEEL by submitting one other attraction against the maintainability of the petition by the financial institution.
