IndusInd has Filed for Insolvency Against Zee Entertainment

After Zee Entertainment Enterprises Ltd defaulted on a debt, IndusInd Bank Ltd approached the National Company Law Tribunal (NCLT) on Friday to commence bankruptcy proceedings against the broadcaster.

Section 7 of the Insolvency and Bankruptcy Code was used to submit the petition.

The bank, which is Zee Entertainment’s main creditor, claimed the company had defaulted on an 83 crore loan. According to a company filing, Zee Entertainment is a party to the Debt Service Reserve Account Guarantee Agreement (DSRA) agreed into with IndusInd for a term credit facility given to Siti Networks Ltd.

IndusInd Bank issued a 400 crore loan facility to Siti Networks, a Zee Entertainment affiliate, as part of the arrangement. The loan was approved on the basis of the promoter group’s guarantee.

IndusInd sent a notice to Zee Entertainment for accelerated payment of the entire sum in October 2020, as per the agreement. Zee has argued that its duty as a guarantor is limited to an amount equal to one quarter’s interest and a further amount equal to one quarter’s principal payment paid on time.

Zee Entertainment and Sony Pictures Networks India agreed to merge in December 2021.

Sony will own the majority of the combined company, while the Zee promoter family will own 3.99 percent, with the option to buy up to 20% from the market.

Invesco Developing Markets Fund and OFI Global China Fund, the broadcaster’s biggest shareholders, are also embroiled in a legal battle. The case concerns a petition filed by Invesco Developing Markets Fund, which asked Zee Entertainment Enterprises to conduct an extraordinary general meeting.

The Bombay high court and other forums are now hearing the case.