In a relief to Zee Entertainment Enterprises (ZEEL), the National Company Law Appellate Tribunal (NCLAT) has stayed an order for initiation of insolvency proceedings against the media firm. The move came after the tribunal heard a petition filed by ZEEL MD & CEO Punit Goenka, seeking relief against the National Company Law Tribunal’s (NCLT’s) Wednesday’s order.
The bench of NCLAT chairperson Justice Ashok Bhushan and member (technical) Barun Mitra, which stayed the NCLT’s Mumbai bench order, has sought reply from respondents in two weeks. The case is now listed for final disposal on March 29. Till then, the NCLT’s order is stayed.
“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,” Goenka said.
On Friday, ZEEL’s shares fell 1.58% to close at Rs 195.60, its lowest since September 2021.
On Wednesday, NCLT’s Mumbai bench permitted insolvency proceedings against ZEEL, an Essel Group company, allowing a petition filed by private lender IndusInd Bank, and appointed Sanjay Kumar Jhalani as interim resolution professional.
The petition was filed in February 2020 by IndusInd Bank, which had sought a payment of more than Rs 83 crore from ZEEL, after the media firm failed to fulfil obligations under a Debt Service Reserve (DSR) account agreement.
Under the agreement, which was signed between the lender and Siti Networks (another Essel Group firm), ZEEL had guaranteed to maintain an amount equal to one quarter’s interest as well as principal in the account for servicing the debts. However, this was not maintained, IndusInd Bank said in its filing before the NCLT.
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The bankruptcy court also admitted IndusInd’s insolvency petition against Siti Networks, a multi-system operator promoted by Essel Group, and appointed Mohit Mehra as the resolution professional.
On Thursday, in an attempt to save the earlier proposed merger with Culver Max Entertainment (CME), Goenka had moved NCLAT and sought a stay on initiating insolvency proceedings.
In September 2021, ZEEL, promoted by media baron Subhash Chandra, had entered into agreement with CME (then Sony Pictures Networks India, a subsidiary of Japan’s Sony Corp) to create the country’s largest media and entertainment company with standalone revenues of $2 billion. The completion of the merger is pending as the companies await certain regulatory approvals.
Section 14 of the Insolvency and Bankruptcy Code (IBC) bars the continuance of various proceedings, and does not permit transactions or deals for companies undergoing insolvency till such cases reach a conclusion.