Zee Entertainment Enterprises has filed an interlocutory application before the Mumbai Bench of National Company Law Tribunal to dismiss the suit filed by IndusInd bank against the company.
On February 5, IndusInd had approached the NCLT to initiate insolvency proceedings against Zee after the broadcaster defaulted on a loan.
The bank, a financial creditor to Zee Entertainment, claimed the company defaulted on a loan of ₹83 crore. Zee Entertainment is a party to the Debt Service Reserve Account Guarantee Agreement (DSRA) entered into with IndusInd for a term loan facility advanced to Siti Networks Ltd.
Under the agreement, IndusInd Bank extended a ₹400 crore debt facility to Siti Networks, a unit of Zee Entertainment. The loan was sanctioned against a guarantee provided by the promoter group.
As per the agreement, IndusInd issued a notice to Zee Entertainment for accelerated payment of the entire amount in October 2020. Zee has been contesting that, as a guarantor, its liability is limited to an amount equivalent to one quarter’s interest and a further amount equivalent to one quarter’s principal installment as and when due.
Thus IndusInd filed a suit against the broadcaster at the NCLT under Section 7 of the Insolvency and Bankruptcy Code.
“The Company has filed an Interlocutory Application before the National Company Law Tribunal, Mumbai Bench seeking an outright dismissal/rejection of the petition filed by IndusInd Bank Limited (“IndusInd Bank”) at the threshold inter alia on the ground that filing of the said company petition by IndusInd Bank is an act in breach/violation of the orders dated February 25, 2021 and December 3, 2021 passed by the Hon’ble Delhi High Court in proceedings instituted by the Company against IndusInd Bank.” said Zee in an exchange filing. The Hindu BusinessLine