NCLAT Delhi Terminates Insolvency Proceedings Against ZEE Entertainment Enterprises Ltd., As Parties Enter Settlement
The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Shri Barun Mitra (Technical Member), while adjudicating an appeal filed in Punit Goenka v Indusind Bank Ltd. & Anr., has closed the Corporate Insolvency Resolution Process against Zee Entertainment Enterprises Ltd. The Bank and Zee Entertainment...
The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Shri Barun Mitra (Technical Member), while adjudicating an appeal filed in Punit Goenka v Indusind Bank Ltd. & Anr., has closed the Corporate Insolvency Resolution Process against Zee Entertainment Enterprises Ltd. The Bank and Zee Entertainment Enterprises Ltd. have entered into a Settlement Agreement and the latter has paid the amount towards the same.
Background Facts
Zee Entertainment Enterprises Ltd. (formerly Zee Telefilms Ltd.) is an Indian media conglomerate owned by Essel Group, engaged in media and entertainment business. Zee had given India its first private satellite TV channel in 1992 and now also runs Over The Top (OTT) online streaming platform named Zee5.
Siti Networks Limited is also a part of Essel Group and was a 100% subsidiary of erstwhile Zee Telefilms Ltd. Siti Networks Ltd. had availed financial facility from IndusInd Bank Ltd. (“Financial Creditor”) for an amount of Rs. 150 Crores, which had a sublimit bank guarantee of Rs. 95,00,00,000/-. In view of the same, Siti Networks Ltd. entered into a Debt Service Reserve Agreement (“DSRA”) with Financial Creditor and Zee Entertainment Enterprises Ltd. became the Guarantor under the DSRA.
Proceedings Before NCLT
When Siti Networks Ltd. failed to fulfill its obligations under DSRA, the Financial Creditor filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 (“IBC”), seeking initiation of Corporate Insolvency Resolution Process (“CIRP”) against Zee Entertainment Enterprises Ltd. (“Corporate Debtor/Zee”). Simultaneous proceedings under Section 7 of IBC have also been initiated against Siti Networks Ltd.
On 22.02.2023, the NCLT admitted the Corporate Debtor into CIRP and appointed Mr. Sanjeev Kumar Jalan as the Interim Resolution Professional.
Proceedings Before NCLAT
Mr. Punit Goenka (“Appellant”) being the Suspended Management of the Corporate Debtor, filed an appeal against the Order dated 22.02.2023. The Appellant argued that the NCLT ought to have granted the Corporate Debtor an opportunity to file Reply in Section 7 petition.
On 24.03.2023, the NCLAT granted time to the Corporate Debtor for filing its Reply in the appeal and stayed the CIRP against the Corporate Debtor.
In a hearing held on 03.07.2023, the Parties submitted that they have entered into Settlement Agreement dated 29.03.2023 and the payments have been made by the Corporate Debtor prior to 30.06.2023. Thus, the CIRP must be terminated.
Accordingly, the Bench has terminated the CIRP against Zee Entertainment Enterprises Ltd.
“In view of the settlement agreement between the parties nothing survives to be decided in the Appeal. Impugned order dated 22.02.2023 is set aside. CIRP against the Corporate Debtor is closed.”
The appeal has been disposed of.
Case Title: Punit Goenka v Indusind Bank Ltd. & Anr.
Case No.: Company Appeal (AT) (Insolvency) No. 232/2023.
Counsel for Appellant: Mr. Aman Raj Gandhi and Mr. Pranay Tuteja, Advocates.
Counsel For the Respondent: Mr. Diwakar Maheshwari, Mr. Karun Mehta, Ms. Pratiksha Mishra, Mr. Vishnu Shriram, Advocates for R-1. Mr. Sanjeev Kumar, Mr. Abhishek, Mr. Pranshu Paul, Mr. Anshul Sehgal and Mr. Divyanshu Jain, Advocates for R-2.