Tuesday, May 21, 2024

Zee gets closer to Sony merger with IndusInd settlement deal

MUMBAI : Zee Entertainment Enterprises Ltd on Wednesday informed the National Company Law Appellate Tribunal (NCLAT) that it has entered into a settlement agreement with IndusInd Bank, inching closer to its planned merger with Sony Pictures (Culver Max Entertainment).

The first tranche of settlement amount has been paid while the second tranche will be paid by 30 June, Zee’s counsel informed the tribunal. The settlement amount has not been disclosed by the company.

IndusInd also informed the appellate tribunal that it would withdraw its insolvency petition, which essentially opposed Zee’s deal with Sony.

However, separate insolvency applications filed by Axis Finance and IDBI against Zee are pending before the bankruptcy court.

In February, the National Company Law Tribunal (NCLT) had admitted an insolvency petition against Zee by IndusInd under Section 7 of the Insolvency and Bankruptcy Code (IBC). This order, however, was immediately challenged by Punit Goenka, Zee’s managing director and chief executive, before the appeals court.

The NCLAT in its verdict granted relief to the media company by staying the insolvency proceedings initiated by IndusInd Bank.

At the same time, the bankruptcy court had also admitted a similar insolvency application against Essel Group’s Siti Networks Ltd, filed by IndusInd Bank.

The matter pertains to a loan taken by Siti Networks, where Zee was the guarantor under the terms of the Debt Service Reserve Account Guarantee Agreement (DSRA) on 29 August 2018.

On 1 October, 2020, IndusInd Bank issued a notice to Zee invoking the DSRA agreement and asked it to pay 83.7 crore. The media company claimed that the bank made the demand for an higher amount, which was the entire loan amount advanced by the bank to Siti on account of the shortfall in the DSRA Account.

IndusInd and Zee were locked in a legal tussle wherein the private lender was seeking payment of its dues. It started in 2021, when IndusInd first approached the Delhi high court and later, in February 2022, it filed a case against Zee under section 7 of the Insolvency and Bankruptcy code for initiating corporate insolvency resolution process against it for seeking payment of dues worth 90 crore.

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