Zee Entertainment Enterprises (Zee) is said to have agreed to clear the dues of IndusInd Bank, following which the private lender would withdraw the insolvency proceedings initiated against the media firm.
The move gains significance as Zee, an Essel Group company promoted by media baron Subhash Chandra, is nearing completion of its earlier announced merger with Culver Max Entertainment (formerly Sony Pictures Networks India) to create the country’s largest media company.
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On Thursday, Zee share prices soared 9.26%, the most in almost a year, to close at Rs 206.55 on the BSE. It had hit 10% upper circuit during intra-day trade.
According to sources close to the development, the dues are expected to be cleared latest by Friday, following which formal announcements would be made.
Queries to IndusInd Bank and Zee were not answered till the time of going to the press on Thursday.
In February, the National Company Law Tribunal’s (NCLT) Mumbai bench permitted initiation of insolvency proceedings against Zee after it admitted a petition filed by IndusInd Bank. The case dates back to February 2020, when IndusInd Bank sought a payment of more than `83 crore from Zee and accused the media firm of failing to fulfil obligations under a debt service reserve (DSR) account agreement
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Under the agreement, which was signed between the lender and Siti Networks (another Essel Group firm), Zee had guaranteed to maintain an amount equal to one quarter’s interest and one quarter’s principal in the account for servicing the debts. However, this was not maintained, IndusInd Bank said in its filing before the NCLT.
Later, the National Company Law Appellate Tribunal (NCLAT) stayed the bankruptcy court’s order, after Zee MD & CEO Punit Goenka sought relief from the appellate tribunal. The case is now listed for final disposal on March 29.
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In September 2021, Zee had entered into agreement with Sony Pictures (now Culver Max Entertainment), a subsidiary of Japan’s Sony Corp) to create the country’s largest media and entertainment company with standalone revenues of $2 billion. The completion of the merger is pending as the companies await certain regulatory approvals.
Section 14 of the Insolvency and Bankruptcy Code (IBC) bars the continuance of various proceedings and does not permit transactions or deals till the insolvency cases reach a conclusion.
On March 6, an insolvency petition filed by Indian Performing Right Society (IPRS), an operational creditor to Zee, alleging default of Rs 211.42 crore, was withdrawn following a mutual agreement between the parties.
In January, IPRS had filed a petition before the NCLT’s Mumbai bench, seeking initiation of corporate insolvency resolution process against the company.
Earlier in December, private lender IDBI Bank had filed an application seeking initiation of insolvency proceedings against Zee, claiming Rs 149.60 crore default.
Prior to that in April, Housing Development Finance Corporation had moved the NCLT against SITI Networks (another Essel Group company) for alleged default of Rs 296 crore.
