The National Company Law Appellate Tribunal (NCLAT) has agreed to hear IDBI Bank’s plea against an order of the National Company Law Tribunal (NCLT), which had rejected its plea to initiate insolvency proceedings against Zee Entertainment Enterprises Ltd.
The NCLAT has now set the next date of hearing on August 31.
In May this year, the Mumbai bench of the NCLT had set aside the bank’s plea, seeking insolvency against Zee, while pointing out that it was barred under Section 10A of the Insolvency & Bankruptcy Code (IBC).
Essel group firm Siti Networks had taken a loan of Rs 150 crore for a working capital facility from the lender and under the agreement, it has to maintain a Debt Service Reserve Account (DSRA). Zee was the corporate guarantor of the loan.
On March 5, 2021, IDBI Bank invoked the guarantee provided by Zee and called to pay Rs 61.97 crore with further interest from February 18, 2021. It claimed an amount of Rs 149.60 crore in default.
This was contested by Zee, which maintained that its guarantee provides for a limited and restricted liability on the guarantor and cannot be held liable for the entire debt in case of default by the borrower Siti Networks.
However, the tribunal had said that the default was committed during the timeline specified under section 10A of the IBC.
