Zee Entertainment Gets Interim Relief from NCLAT, Stay on Insolvency Proceedings
In a recent development, the National Company Law Appellate Tribunal (NCLAT) has granted interim relief to Zee Entertainment Enterprises (ZEE) and stayed the order directing the initiation of insolvency proceedings against the media and entertainment firm. The decision comes after Zee managing director Punit Goenka appealed to set aside the order on initiation of insolvency, stating that Zee was not allowed a hearing to defend its position during the NCLT hearing. The appellate tribunal has also issued a notice to IndusInd Bank and will hear the case again on March 29.
ZEEL remains committed to protecting the interests of all stakeholders and aims to focus on the timely completion of the Sony merger. The stock price of ZEEL also recovered from an intraday low of Rs 190 and broke into the green, reaching nearly 2 percent by 12:50 pm and trading at Rs 201.90 a piece on the National Stock Exchange.
Zee Case Background:
The case background shows that the proceedings were initiated as Zee was a guarantor to a loan under the Debt Service Reserve Account Guarantee Agreement (DSRA Guarantee Agreement) entered into with lnduslnd Bank Limited for the term loan facility advanced to Siti Networks Limited. The NCLT Mumbai had earlier admitted insolvency proceedings against ZEEL in a plea filed by IndusInd Bank after Zee failed to honour the Debt Service Reserve Account Guarantee Agreement (DSRA), causing a shortfall of Rs 83 crore.
Furthermore, in January, Axis Bank’s subsidiary Axis Finance had threatened legal action against Subhash Chandra and Punit Goenka, Zee Entertainment, including opposing the merger between Zee and Sony Pictures Network India (SPNI). The Delhi high court also clarified in its order from September 2022 that IndusInd Bank can initiate insolvency proceedings against ZEEL before a bankruptcy court, despite the ongoing proceedings between the two before the High Court.
The stay on the insolvency proceedings by the NCLAT is a significant development for ZEEL, and the company is expected to continue working towards resolving the issue and completing the Sony merger in a timely manner.
About Zee Entertainment:
Zee Entertainment Enterprises is mainly in the following businesses: Broadcasting of Satellite Television Channels, Space Selling agent for other satellite television channels, and Sale of Media Content i.e. programs / film rights / feeds /music rights.
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