Zee Entertainment (ZEEL) and IndusInd Bank have announced the successful resolution of their financial dispute, with ZEEL making all the payments due to IndusInd Bank on June 30. As a result, the National Company Law Appellate Tribunal (NCLAT) has disposed of the appeal filed in relation to the case. Moreover, the NCLAT has set aside the National Company Law Tribunal’s (NCLT) order that allowed Zee Entertainment to be admitted to insolvency, effectively bringing an end to the legal proceedings.
Earlier in March 2023, the parties informed the NCLAT about reaching a settlement agreement, which included the fulfillment of payment obligations by Zee Entertainment. These payments were scheduled to be made by June 30 or within seven days of the completion of the merger with Sony. Some of the agreed-upon funds were already disbursed in March 2023, as confirmed by the lawyers representing the parties to the NCLAT.
The NCLAT had previously ruled that the Zee-Sony merger scheme could be considered separately from the ongoing litigation. IndusInd Bank also informed the tribunal of its decision to withdraw objections to the merger scheme. The case was listed for July 3, to report the completion of the settlement.
In February 2023, the NCLT Mumbai had initiated insolvency proceedings against Zee Entertainment based on a plea filed by IndusInd Bank. This action was taken because Zee had served as a guarantor for a loan of Rs 150 crore provided by IndusInd Bank to Essel Group’s Siti Networks under a Debt Service Reserve Account Guarantee Agreement (DSRA). However, Zee failed to fulfill its obligations, resulting in a shortfall of Rs 83 crore.
Punit Goenka, representing Zee Entertainment, appealed against the NCLT’s order, which led to a stay on the initiation of insolvency proceedings in February by the NCLAT. The Delhi High Court had previously clarified in September 2022 that IndusInd Bank could proceed with insolvency proceedings against Zee Entertainment before a bankruptcy court, despite ongoing proceedings between the two parties in the High Court.
With the settlement reached between Zee Entertainment and IndusInd Bank, the resolution of this financial dispute brings a positive outcome for both entities. The disposal of the appeal by the NCLAT signifies the conclusion of legal proceedings and allows Zee Entertainment to focus on its ongoing operations and the upcoming merger with Sony.
Sources By Agencies