In December 2022, IDBI Bank asked the Mumbai court to initiate bankruptcy proceedings against Zee Entertainment
IDBI Bank’s appeal against the National Company Law Tribunal’s (NCLT) ruling will be heard in full by the National Company Law Appellate Tribunal (NCLAT) on August 17. The issue concerns the lender’s claim of insolvency against sizable media company Zed Entertainment Enterprises Limited (ZEEL).
No notification has been sent to ZEEL, and IDBI is now asking for one week to file further paperwork. The next hearing will take place on August 31.
Senior lawyer Ramji Srinivasan, who represented IDBI at the court, said that Siti Networks—the primary borrower for whom ZEEL served as a corporate guarantor—had taken out both a term loan and a working capital credit.
According to the conditions of the loan, Siti was required to keep a cash on hand equal to two months’ worth of loan payments, and the guarantor was in charge of keeping the rest. Siti was obliged to take action against Zee Enterprises in order to enforce this because they were unable to keep such a balance.
Additionally, Srinivasan claimed that Section 10A did not apply to the reimbursement.
In their representation of ZEEL, senior solicitors AM Singhvi and Arun Kathpalia claimed that they were fiercely opposed to the tribunal’s giving of notice in the matter.
The tribunal did point out that they might not be able to hear the case in its entirety today owing to scheduling constraints. Thus, the lawsuit was postponed.
The Mumbai bench of the NCLT declined to hear IDBI’s argument in May 2023, saying that it was disallowed under Section 10A of the Insolvency and Bankruptcy Code (IBC).
No application for the start of a corporate insolvency resolution procedure (CIRP) can be made against a debtor by a financial or operational creditor for any failure occurring on or after March 25, 2020, for a period of one year, according to Section 10A.
