Zee-IDBI Insolvency Case Hearing Deferred by Nclat Until November

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Zee-IDBI Insolvency Case Hearing Deferred by Nclat Until November
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The National Company Law Appellate Tribunal (NCLAT) has deferred the hearing of the insolvency case involving IDBI Bank and Zee Entertainment Enterprises Limited (ZEEL), a part of the Essel Group, to November 8, 2023. This decision was made on Wednesday, following IDBI Bank's insolvency plea against ZEEL over unpaid dues amounting to Rs 150 crore (approximately $2 million).

The NCLAT directed both parties to fully comprehend the gravity of the case and submit their responses accordingly. IDBI Bank, positioned as a financial creditor, is disputing an order from the National Company Law Tribunal's (NCLT) Mumbai bench that sanctioned Sony (NYSE: SONY ) Pictures' merger with Zee Entertainment. The bank initiated a Corporate Insolvency Resolution Process against ZEEL under section 7 of the Insolvency and Bankruptcy Code, 2016.

In addition to this case, IDBI Bank is also contesting the NCLT Mumbai bench's decision that rejected its bankruptcy filing against ZEEL. The rejection was based on Section 10A of the Insolvency and Bankruptcy Code, which bars insolvency filings for defaults occurring during the COVID-19 period.

IDBI Bank attributes an earlier default to ZEE's Debt Service Reserve Account (DSRA) corporate guarantee for loans extended to Siti Networks. On the other hand, ZEEL argues that this guarantee was insufficient. The NCLT ruled that ZEEL defaulted within the timeframe stipulated in Section 10A.

Notably, a similar case against ZEEL has been lodged by IndusInd Bank. The outcome of these proceedings could set a precedent for future insolvency cases involving similar circumstances.

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