NCLT Mumbai Initiates Insolvency Proceedings Against Siti Networks Ltd.

Background Facts

Siti Networks Ltd. (“Corporate Debtor”) is engaged in the business of multi-system operator and provides television services across India. Corporate Debtor is a part of the Essel Zee Group promoted by Dr. Subhash Chandra and was a 100% subsidiary of erstwhile Zee Telefilms Ltd. (now Zee Entertainment Enterprises Ltd.).

The Corporate Debtor had availed credit facilities from the IndusInd Bank Ltd. (“Financial Creditor”) to the tune of Rs. 250 Crores and Rs. 150 Crores. In view of the same, the Corporate Debtor entered into a Debt Service Reserve Agreement (“DSRA”) with Financial Creditor and Zee Entertainment Enterprises Ltd. became the Guarantor under the DSRA.

The Corporate Debtor defaulted in fulfilling its obligations under the DSRA. The Financial Creditor issued a Demand Notice dated 25.04.2022 to the Corporate Debtor, demanding payment of Rs. 1,48,82,90,236.22/-. When the payment was not received, 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 the Corporate Debtor.

Simultaneous proceedings under Section 7 of IBC were also initiated against the Guarantor of Corporate Debtor, i.e. Zee Entertainment Enterprises Ltd.

NCLT Verdict

The Bench opined that the existence of debt and default stand proved and there are no reasons to dismiss the Section 7 application. On 22.02.2023, the Bench admitted the Corporate Debtor into CIRP and has appointed Mr. Rohit Mehra as the Interim Resolution Professional.

Case Title: Indusind Bank Ltd. v Siti Networks Ltd.

Case No.: C.P. No. 690/IBC/MB/2022

Counsel for Applicant: Mr. Ashish S Kamat a/w Pratiksha Agarwal, Adv. Vishnu Shriram i/b Khaitan & Co.

Counsel For the Respondent: Mr. Prathamesh Kamat a/w Shreni Shetty and Antara Kalambi i/b ANB Legal.

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