Zee Entertainment, IndusInd Bank announce settlement, NCLAT disposes of appeal

NCLT Mumbai on February 22 admitted insolvency proceedings against ZEEL in a plea filed by IndusInd Bank. (Representative Image: Shutterstock)

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Zee Entertainment and IndusInd Bank have announced that all payments due to IndusInd bank were made by ZEEL on June 30. The National Company Law Appellate Tribunal (NCLAT) has accordingly disposed of the appeal.

Further, the National Company Law Tribunal (NCLT) order allowing Zee Entertainment to be admitted to Insolvency has been set aside for good by NCLAT. The tribunal has also directed both the parties to pay the cost that the interim resolution professional incurred in the brief period where it was under the resolution process.

In March 2023, the parties informed NCLAT that they have reached a settlement and as per the settlement agreement, payment obligations have been undertaken, which will be paid till June 30, or within 7 days of the Sony merger. Certain money has been paid as per the agreement in March 2023, the lawyers had informed NCLAT.

NCLAT had ordered that Zee-Sony merger scheme can be considered without this litigation coming. IndusInd had also informed the tribunal that it will withdraw its objections to the merger scheme.  Tribunal had listed the case on July 3, to report completion of settlement.

Background

NCLT Mumbai on February 22 admitted insolvency proceedings against ZEEL in a plea filed by IndusInd Bank. The proceedings were initiated as Zee was a guarantor for IndusInd Bank’s Rs 150 crore loan to Essel Group's Siti Networks under Debt Service Reserve Account Guarantee Agreement (DSRA). However, it failed to honour the agreement, resulting in an Rs 83 crore shortfall.

Punit Goenka of ZEEL appealed against this order in NCLAT. In February, NCLAT stayed the order directing the initiation of insolvency proceedings against the media and entertainment firm.

The Delhi High Court in September 2022 clarified that IndusInd Bank can initiate insolvency proceedings against ZEEL before a bankruptcy court, despite the ongoing proceedings between the two before the High Court.