IndusInd Bank has moved the dedicated bankruptcy court against Zee Entertainment Enterprises seeking payment of over Rs 89 crore in defaults. On Friday, the company informed the stock exchange in a late evening stock exchange filing that the private sector lender has approached the Mumbai bench of the National Company Law Tribunal (NCLT) under the Corporate Insolvency Resolution Process (CIRP). “An application has been filed against the Company, under Section 7 of the Insolvency and Bankruptcy Code, 2016 read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules 2016, by IndusInd Bank Limited, claiming to be a Financial Creditor, before the Hon’ble Nationa l Company Law Tribunal, Mumbai Bench for initiation of Corporate Insolvency Resolution Process against the Company, claiming a default of Rs.83,08,00,000,” Zee said in a BSE filing.
The development comes at a time when the Mumbai-based entertainment company has already entered into a definitive agreement with Sony Pictures Network India (SPN) for a merger. The board of directors of Zee Entertainment Enterprises Ltd (ZEEL) on December 22 last year had approved the merger with SPNI. Sony will hold 50.86 per cent stake in the merged entity, the Board had said. Further, it is also embroiled in a legal tussle with its largest shareholder, Invesco, at multiple judicial forums.
Zee said that it is a party to 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 issue of the company’s alleged default under the DSRA Guarantee Agreement, is sub-judice before the Hon’ble Delhi High Court in Suit No. (CS (Comm) 500/2020) filed by the company against lnduslnd Bank,” it added.
Zee claimed that the case is sub-judice before the Delhi High Court and the filing of the corporate insolvency resolution process (CIRP) application against the company is in breach of an order passed in the company’s appeal on December 3, 2021. The company will take appropriate legal steps in this regard, it added.
“Filing of the said CIRP application is in breach of the order dated February 25, 2021 as modified by the order of December 3, 2021 passed in the Company’s Appeal No. (FAO(OS)(Comm) 15/2021) in the said suit. The company will therefore be adopting appropriate legal steps in that regard,” Zee Entertainment said in the filing.
Last month Axis Bank’s subsidiary Axis Finance had threatened legal action against Subhash Chandra and Punit Goenka, managing director and chief executive officer, Zee Entertainment including opposing merger between Zee and Sony Pictures Network India (SPNI). In a letter to Zee, Axis Finance said that Chandra owes it outstanding dues worth Rs 146 crore.
At that time, ZEE maintained that neither the company nor its MD and CEO, Punit Goenka, were party to any of the loan documents. The company also pointed out that Goenka or the company did not provide any assurance to Axis Finance for repayment.
The shareholders are seeking removal of Punit Goenka and appointment of six new independent directors. The Zee-Invesco matter is currently being argued at the National Company Law Tribunal (NCLT), National Company Law Appellate Tribunal (NCLAT) and Bombay High Court.
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