In fact, Zee Entertainment’s case has now gone to the National Company Law Tribune (NCLT), which means the company will now have to go through the insolvency process, and as per the IBC rules, once the company has gone into insolvency, any transfer of assets will be prohibited. gets stopped.
New Delhi:
The merger between the country’s leading media company Zee Entertainment Enterprises Ltd and Sony Pictures (Sony Pictures Networks India Pvt.) has now gone on hold. In fact, Zee Entertainment’s case has now gone to the National Company Law Tribune (NCLT), which means the company will now have to go through the insolvency process, and as per the IBC rules, once the company has gone into insolvency, any transfer of assets will be prohibited. gets stopped.
NCLT accepts IndusInd Bank’s plea
IndusInd Bank had applied for insolvency proceedings against Zee Entertainment in NCLT. The order came on the same petition filed by IndusInd Bank Ltd after the company failed to meet its obligation under an agreement to repay a loan between the bank and Citi Networks Ltd, to which Zee was also a party. The network is part of the Essel Group. The court has also appointed Sanjay Kumar Jhalani as the interim resolution professional.
What is the matter?
Under the terms of the agreement, Zee had guaranteed an IndusInd Bank loan of Rs 150 crore to Citi Networks, with an amount equal to one-fourth of the interest and one-fourth of the principal amount to be maintained at all times in the account to service the loan. Zee had guaranteed to maintain this amount under the agreement, but it failed to do so. According to IndusInd, Citi Networks failed to maintain the account since September 2019, and has been a defaulter since then. In such a situation, the amount of default reached Rs 89 crore. The IndusInd Bank tribunal said that Zee should also be made liable for this default.
What will happen to the Zee Entertainment-Sony merger?
Sony Pictures’ deal with Zee Entertainment is stuck after it went to NCLT.
Is there any way for ji?
Divyanshu Pandey, Partner, S&R Associates, says that apart from Section 12A which allows for withdrawal of insolvency petition, the only other way out is for G to move an order canceling the approval from the Appellate Tribunal. Although the expectation is very less, there is still some hope of its success due to the decision of Vidarbha Industries.
In this case, the Supreme Court ordered that the Insolvency and Bankruptcy Code is not intended to penalize solvent companies that have temporarily defaulted on their debt payments. And that the NCLT has the discretion to accept bankruptcy applications.
According to Divyanshu Pandey, the big question is whether Sony will be ready to wait till ji goes through the appeal or resolution process. Zee Entertainment CEO Puneet Goenka told BQ Prime that the company is determined to complete the merger.
In August last year, Zee appealed to the NCLT for approval of the merger with Sony. Its board of directors had approved the plan in December 2022 and 90% of the secured creditors had given NOC to the company for the merger. Based on this, the tribunal did away with the need for a creditors’ meeting under the Companies Act.
Zee currently owes 90% of its secured loans to two leading secured creditors, HDFC Bank Ltd and Kotak Mahindra Bank Ltd. However, the loan is very small, amounting to less than Rs 33 crore as on December 31, 2021.
The merger appeal is now in the second stage with the NLCT, it will be discussed on March 9. In the second stage of merger, the court fixes the date of final hearing and informs all the stakeholders through public notice. At this stage, if anyone has any objection against the merger, then it is also invoked.
(This news has been published exactly from BQ Prime Hindi.)