The National Company Law Appellate Tribunal (NCLAT) granted interim relief to Zee Entertainment Enterprises Ltd (ZEEL) on February 24 and stayed the order directing the initiation of insolvency proceedings against the media and entertainment firm.
The appellate tribunal further issued notice to IndusInd Bank on plea by Zee managing director Punit Goenka and said it will hear the case again on March 29.
Zee also said in the NCLAT that in the NCLT hearing, it was not allowed a hearing to defend its position, hence it appealed to set side the order on initiation of insolvency.
"Respect the decision by NCLAT, we remain committed to protecting interests of all stakeholders. Focus continues to be on timely completion of Sony merger," Goenka said post the hearing.
In reaction, the stock price of ZEEL recovered from intraday low of Rs 190 and broke into the green. At 12:50 pm, the stock was up nearly 2 percent and was trading at Rs 201.90 a piece on the National Stock Exchange.
Background of the case:
NCLT Mumbai on February 22 admitted insolvency proceedings against ZEEL in a plea filed by IndusInd Bank. Zee was the guarantor for IndusInd Bank's Rs 150-crore loan to Essel Group's Siti Networks, however, it failed to honour the Debt Service Reserve Account Guarantee Agreement (DSRA). The shortfall amounted to Rs 83 crore.
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.
Also Read: Zee admitted to insolvency, stock falls most in two years on merger delay concerns
In January, Axis Bank's subsidiary Axis Finance had threatened legal action against Subhash Chandra and Punit Goenka, Zee Entertainment including opposing merger between Zee and Sony Pictures Network India (SPNI).
The Delhi high court in its order from September 2022 clarified IndusInd Bank can initiate insolvency proceedings against ZEEL before a bankruptcy court, despite the ongoing proceedings between the two before the High Court.
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