The IDBI Bank on December 15 filed an insolvency application against Zee Entertainment Enterprises Ltd. for initiating a corporate insolvency resolution process (CIRP). The petition has been filed under section 7 of the Insolvency and Bankruptcy Code, 2016, which allows a financial creditor to file an application for initiating CIRP against a corporate debtor before the adjudicating authority. The IDBI has claimed a default of Rs. 149 crore.
The bank’s purported claim arises under a Debt Service Reserve Account (DSRA) Guarantee Agreement entered into by the bank and Zee for the financial facility availed by Siti Networks, a sister company.
On its part, Zee is vehemently disputing the bank’s claim in other proceedings filed by the bank against it for recovery of its alleged dues.
In February this year, a similar petition was filed by IndusInd Bank before the National Company Law Tribunal (NCLT) under section 7. The bank had claimed a default of Rs. 83.08 crore against Zee. On its part, Zee filed an interlocutory application with the Tribunal for the dismissal of the lender’s petition.
The dispute between Zee and IndusInd Bank was heard by the Delhi high court in September this year. IndusInd filed a plea, seeking clarity on whether it could take Zee to the bankruptcy court for recovery of dues. The Delhi HC on September 13 clarified that it had not restrained IndusInd Bank from taking Zee to the insolvency court. In the IndusInd Bank case, Zee was the guarantor for the loan taken by Siti Networks from the bank in terms of the Debt Service Reserve Account (DSRA) Guarantee Agreement dated August 29, 2018.