Bankruptcy court dismisses IDBI Bank’s insolvency plea against Zee Ent

The bankruptcy court on Friday dismissed an application filed by IDBI Bank to initiate Corporate Insolvency Resolution Process (CIRP) against 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 Mumbai bench of the National Company Law Tribunal (NCLT) led by judicial member Kishore Vemulapalli and technical member Prabhat Kumar in its oral order dismissed an application filed by the IDBI Bank.

The detailed order was not available till the time of filing the story.

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.

In the wake of the Covid-19 outbreak and subsequent lockdown, on March 25, 2020, the government brought Section 10A, which clarified that no application for initiation of CIRP shall be filed for any default arising on or after March 25, 2020, for a period of six months or such period, not exceeding one year from such date.

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.

Zee and Sony had signed definitive agreements in December 2021 to merge their businesses. The proposal has already received approvals from the BSE, NSE and Zee shareholders. The Competition Commission of India has also approved the merger with modifications.

Under the terms of the proposed deal, Sony Pictures Entertainment will indirectly hold a majority of 50.86% in the combined company, while the founders of Zee will own 3.99%, and 45.15% will be with the other shareholders of Zee. Sony will also pay a non-compete fee of Rs 1,100 crore to Essel Group promoters.