The National Company Law Tribunal’s (NCLT) Mumbai bench on Wednesday allowed initiation of insolvency proceedings against Zee Entertainment Enterprises (ZEEL), an Essel Group company, admitting a petition filed by private lender IndusInd Bank. The bankruptcy court has also appointed Sanjay Kumar Jhalani as the interim resolution professional (IRP) for the process.
The bankruptcy court admitted a petition filed earlier by IndusInd Bank, which had moved the court seeking a payment of more than Rs 83 crore from ZEEL. This came after ZEEL failed to fulfil obligations under a Debt Service Reserve (DSR) account agreement.
Under the terms of the DSR account agreement, which was signed between the lender and Siti Networks (another Essel Group firm), ZEEL was also a party to it. ZEEL had guaranteed to maintain an amount equal to one quarter’s interest and one quarter’s principal in the account for servicing the debts but failed to do so.
Siti Networks, formerly Wire and Wireless, is a multi-system operator promoted by Essel Group.
The court has also admitted IndusInd’s insolvency petition against Siti Networks and appointed an interim resolution professional.
According to IndusInd Bank’s petition, Siti had failed to maintain the account since September 2019, with the dues amounting to Rs 89 crore. It had also stated that ZEEL, being the guarantor, should be also made a party in the case.
ZEEL had stated that IndusInd Bank’s petition was a “breach or violation” of previous orders passed by the Delhi High Court. In February 2022, the company had moved an application before the NCLT requesting the dismissal of IndusInd Bank’s plea.
In January, Indian Performing Right Society (IPRS), an operational creditor to ZEEL, had filed an insolvency petition before the NCLT Mumbai bench against the media firm claiming Rs 211.42 crore of debt. On its part, ZEEL had said the creditor is claiming debt and default towards royalty payable for utilisation of “literary and musical works”.
Earlier in December, private lender IDBI Bank had filed an application seeking initiation of insolvency proceedings against ZEEL, claiming Rs 149.60 crore of default. The bank’s claim arises under a debt service reserve agreement entered into by the bank and ZEEL for a financial facility availed by Siti Networks, ZEEL had said then.
In April, Housing Development Finance Corporation (HDFC) had moved the NCLT against SITI Networks for alleged default of Rs 296 crore.