The National Company Law Appellate Tribunal (NCLAT) has 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 National Company Law Tribunal’s (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.
As per the scheme of the arrangement, Sony will indirectly hold 50.86 per cent of the combined company. The founder of Zee will own around four percent and the rest will be with the other shareholders of ZEEL. Moreover, Sony Group will also pay a non-compete fee of Rs 1,100 crore to the Essel Group promoters.