NCLT dismisses IDBI Bank's insolvency plea against Zee Entertainment

The National Company Law Tribunal on Friday dismissed IDBI Bank's insolvency plea against Subhash Chandra promoted Zee Entertainment Enterprises Ltd (ZEEL).
The public sector lender had filed an insolvency resolution petition against Zee for the default of over Rs 149 crore. The company said in a filing in December 2022 told said that IDBI Bank, claiming to be a financial creditor, filed the petition before the Mumbai bench of the NCLT.

Before the tribunal’s order, Senior Counsel Zal Andhyarujina and Bindi Dave of the law firm Wadia Ghandy & Co., while appearing for the Subhash Chandra promoted Zee Entertainment argued that since the date of default occurred during the suspension period, it bars the admission of any insolvency petition, under Section 10A of the Insolvency & Bankruptcy Code, 2016.

This is a major relief for Zee Entertainment after both its other creditors IndusInd Bank and Indian Performing Right Society (IPRS) settled their diesputes and withdrew an insolvency plea against the company from the tribunal.

News agency Bloomberg on April 20 reported citing sources that Zee Entertainment has started settlement talks with its creditors to repay debts and remove the last hurdle in completing a merger with the Sony Group that would create a $10 billion media giant.

The Indian television network had reportedly offered IDBI Bank Ltd to repay a loan of about Rs 149 crore in tranches.

ZEEL is in the process of a merger with Sony Pictures Network India (SPN). On December 22, 2021, ZEE and SPN signed a definitive agreement to merge the two companies. The proposed merger will see ZEE merging into SPN and, after closing, the merged company will be publicly listed in India.

As per the agreement, ZEE MD & CEO Punit Goenka will lead the merged company as its MD and CEO. The board will have nine directors, of whom the Sony Group will nominate five, while three will be independent.

The company has already received approval from stock exchanges, the anti-monopoly regulator the Competition Commission of India (CCI) and also from its shareholders.

Under the terms of the arrangement, Sony will hold a 50.86 % stake in the merged entity. The promoters of Zee will hold 3.99% and other Zee shareholders will hold a 45.15% stake in the combined company.

Several creditors to the company and its founders had been approaching the bankruptcy court seeking repayments. In March, the company repaid dues of one creditor IndusInd Bank Ltd., and the lender will withdraw its objections against the merger, Zee said in a filing.

(With ET Bureau and agency inputs)