The National Company Law Appellate Tribunal (NCLAT) on Friday stayed the insolvency proceedings initiated against Zee Entertainment Enterprises Ltd by IndusInd Bank.
On Wednesday, the Mumbai bench of the NCLT had admitted the insolvency plea against Zee by IndusInd Bank, that was challenged by Zee’s MD Punit Goenka.
“The appeal was heard today (Friday) wherein, NCLAT has issued notice that directed IndusInd Bank to file its reply in two weeks, and the company to file rejoinder in two weeks thereafter. The appeal is now listed for final disposal on March 29, 2023, and till that time the order dated February 22, 2023, passed by the NCLT is stayed,’’ Zee said in a regulatory filing.
Shares of Zee ended lower 1.58 per cent at Rs 195.60 in an otherwise weak market.
The NCLAT said the submissions made by both sides need a detailed hearing. ``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,” said the NCLAT bench comprising chairperson Justice Ashok Bhushan and Barun Mitra.
During the proceedings, senior advocate Mukul Rohatgi representing Zee said IndusInd Bank initiated insolvency against Zee for being a corporate guarantor to a loan provided to Siti Networks.
Pointing out that it was a “comedy of errors,” he said Zee was not a regular guarantor of the loan, under which a comfort amount was to be maintained in a debt service reserve account to pay the interest.
Rohatgi said Zee did not give a special guarantee for the debt: the guarantee was given only if Siti Networks did not comfortably maintain one tranche of interest.
He said Zee is undergoing a merger with Culver Max, earlier known as Sony Max, and the NCLT order will result in the deal getting stuck.
Senior advocate Rajiv Nayar, representing IndusInd Bank, said Zee was a “principal debtor” according to the agreement and that a cash buffer had to be maintained. Instead Zee was going from one court to another, taking their chance.
Reacting to the stay, Goenka said: “We respect the decision taken by the NCLAT and remain committed towards protecting the interests of all stakeholders. Our focus is on the timely completion of the proposed merger (with Culver Max Entertainment)’’