Zee Entertainment dragged to insolvency court by IDBI Bank
There’s no end of troubles for Essel group as one of its companies — Zee Entertainment Enterprise Ltd – now faces insolvency and bankruptcy proceedings.
IDBI Bank has filed an insolvency application against Zee Entertainment with the Mumbai bench of the National Company Law Tribunal (NCLT) for defaulting on a payment of Rs 149.60 crore, the company said in an exchange filing.
The Subash Chandra-promoted group in the exchange filing said that bank’s ‘purported claim arises under a Debt Service Reserve Agreement entered into by the bank and the Company for the financial facility availed by Siti Networks Limited.
Zee Entertainment said in the statement that it has ‘vehemently’ disputed IDBI Bank’s claim in other proceedings filed by the bank against the company for recovery of its alleged dues.
Zee Entertainment recently merged with Sony Pictures Network India after the final go-ahead from the Competition Commission of India (CCI), which has raised several market dominance related concerns over the merger. The company had to agree to sell three of its Hindi entertainment channels — Big Magic, Zee Action and Zee Classic – to address the concerns raised by CII.
But even before the merger met regulatory hurdles, Zee Entertainment’s minority shareholders – Invesco Group – had vehemently opposed the merger. The foreign institutional investor had even tried to force the MD and CEO Punit Goenka to step down from the post. However, Zee Entertainment managed to sailed through those opposition to not only complete the merger but also retain its MD and CEO.
Another Essel Group company – Dish TV – was, however, not so fortunate as one of its largest shareholders Yes Bank forced the company to step down from his post.
The insolvency application by IDBI Bank could be just in the nature of a threat. Besides, there seems to be a dispute on the amount due, and if the dispute is established the NCLT may not admit IDBI’s insolvency petition against the Zee Entertainment.
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