The National Company Law Tribunal (NCLT) approved the merger scheme of media giants ZEE and Sony nearly a month ago. IDBI Bank has now challenged the order before the appellate tribunal in New Delhi.
IDBI Bank is one of the creditors of Zee Entertainment Enterprises Limited. Its earlier objection against the merger was dismissed by the NCLT on August 10, following which they have now appealed before the NCLAT.
The NCLAT had earlier, directed Zee to respond to IDBI’s plea seeking insolvency proceedings within two weeks. The case is scheduled for its next hearing on October 11. This follows the NCLT’s previous rejection of IDBI’s plea on May 10 to initiate insolvency proceedings against Zee Entertainment.
The IDBI’s plea was centered around outstanding dues of Rs 149 crore that it claims Zee owes. IDBI’s argument is based on Zee’s purported agreement to secure loans extended to Siti Networks through a DSRA Guarantee (Debt Service Reserve Account).
This move comes after the Mumbai bench of NCLT approved the Zee-Sony merger on August 11. IDBI Bank’s contention is that Siti Networks was obligated to maintain the DSRA, which would cover two quarters of interest of term loan, working capital, and one quarter of principal payment.
Zee had submitted a guarantee and was responsible for addressing any shortfalls in the DSRA. IDBI also stated that it had informed Zee about the relevant shortfalls in the DSRA.