The Financial Express
Zee Entertainment Enterprises Ltd (ZEEL) has reached a settlement with IndusInd Bank in relation to their payment dispute, following which the private lender would withdraw insolvency proceedings initiated against the media firm.
This is important as ZEEL, an Essel Group company promoted by media baron Subhash Chandra, is close to completion of its earlier announced merger with Culver Max Entertainment (formerly Sony Pictures Networks India) to create the country’s largest media firm.
The company and IndusInd Bank have mutually entered into the settlement agreement on such agreed terms by which all disputes and claims have been settled between the firm and the lender. There is no penalty paid and no material impact on the financial position of the company, ZEEL said in a regulatory update.
After the announcement, ZEEL share prices ended up 3.40% at Rs 216 on the BSE.
In February, the National Company Law Tribunal’s (NCLT) Mumbai bench permitted initiation of insolvency proceedings against ZEEL, 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 Rs 83 crore from ZEEL and accused the latter of failing to fulfill obligations under a Debt Service Reserve (DSR) account agreement.
Under the agreement, which was signed between the lender and Siti Networks (another Essel Group firm), ZEEL 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 had said in its filing before NCLT.
Later, the National Company Law Appellate Tribunal (NCLAT) stayed the bankruptcy
court’s order, after ZEEL MD & CEO Punit Goenka sought a relief from the appellate tribunal. The settlement came ahead of the final disposal of the case listed for Wednesday.
In September 2021, ZEEL had entered into an 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.
The Section 14 of 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 Ltd (IPRS), an operational creditor to ZEEL, alleging default of Rs 211.42 crore was withdrawn following a mutual settlement agreement between the parties. In January, IPRs had filed a petition before 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 ZEEL, claiming Rs 149.60 crore of default. Prior to that in April, Housing Development Finance Corporation Ltd had moved NCLT against SITI Networks (another Essel Group company) for alleged default of Rs 296 crore.
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