IDBI Bank Challenges NCLT Order on Zee Entertainment's Insolvency

2 Aug 2023 , 02:27 PM

IDBI Bank has moved the National Company Law Appellate Tribunal (NCLAT) against Zee Entertainment to challenge an NCLT order. The NCLT order had rejected IDBI Bank’s plea to initiate insolvency proceedings against Zee Entertainment, which is a major media company.

The NCLAT has scheduled the hearing for IDBI Bank’s petition on a Wednesday before a bench comprising Chairperson Justice Ashok Bhushan and Member Barun Mitra.

The Mumbai bench of NCLT, on May 19, 2023, set aside IDBI Bank’s plea, stating that it was barred under Section 10A of the Insolvency & Bankruptcy Code (IBC).

Section 10A of the IBC prohibits the filing of insolvency applications against debtors for defaults arising on or after March 25, 2020, for one year.

Zee Entertainment (ZEEL) informed through a regulatory filing that IDBI Bank has appealed against the NCLT order before the NCLAT, Delhi.

The dispute originates from IDBI Bank’s attempt to initiate insolvency proceedings against Siti Networks, a corporate guarantor for the loan availed by IDBI Bank.

Siti Networks had taken a loan of Rs 150 crore for a working capital facility from IDBI Bank and Zee Entertainment was its corporate guarantor.

The NCLT observed that ZEEL committed a default, but the default occurred during the period specified under Section 10A of the IBC, rendering the plea invalid.

ZEEL contested IDBI Bank’s claim, asserting that its guarantee provided for limited liability and should not hold it liable for the entire debt in case of borrower default.

The NCLAT hearing will decide the outcome of the case and will have significant implications for the ongoing dispute between IDBI Bank and Zee Entertainment.

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