The National Company Law Appellate Tribunal (NCLAT) has scheduled a hearing for August 31, 2023, to address IDBI Bank’s plea against Zee Entertainment in a payment dispute case. The private lender contests a prior NCLT decision that denied its request to initiate insolvency proceedings against the media conglomerate on May 19.
The NCLT’s Mumbai branch had ruled that the lender’s request was inadmissible under section 10A of the Insolvency & Bankruptcy Code (IBC). This section prohibits the initiation of corporate insolvency resolution proceedings by financial or operational creditors for defaults occurring on or after March 25, 2020, for a one-year period, as a measure to support businesses as they recovered from the pandemic-induced disruptions.
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The dispute centers around Zee Entertainment Enterprises Ltd (ZEEL), acting as the corporate guarantor for a loan received by Siti Networks, IDBI Bank’s primary borrower. While the default did occur, it fell within the time frame specified by section 10A of the IBC.
The NCLT clarified that section 10A permanently restricts the filing of applications under Sections 7, 9, and 10 of the IBC for defaults between March 25, 2020, and March 25, 2021. The case involves Siti Networks’ Rs 150 crore loan for a working capital facility, with the loan agreement mandating the maintenance of a Debt Service Reserve Account (DSRA).
