The National Company Law Appellate Tribunal (NCLAT) has scheduled a hearing to consider IDBI Bank's plea regarding a payment dispute case involving Zee Entertainment on August 31, 2023.
The private lender has contested a decision by the NCLT that rejected its request to initiate insolvency proceedings against a major media company on May 19.
The Mumbai branch of the NCLT ruled that the lender's plea was not permissible under section 10A of the Insolvency & Bankruptcy Code (IBC).
According to the NCLT's findings, the media company, Zee Entertainment Enterprises Ltd (ZEEL), which acted as the corporate guarantor for a loan obtained by Siti Networks, the primary borrower of IDBI Bank, had indeed defaulted.
However, this default occurred within the timeframe specified in section 10A of the IBC. Section 10A stipulates that no application for the initiation of corporate insolvency resolution proceedings can be filed against a debtor by any financial or operational creditor for defaults arising on or after March 25, 2020, for a period of one year.
This provision was introduced by the government in the IBC to assist companies as economic activities resumed in stages following the lockdown.
The NCLT clarified that section 10A permanently prohibits the filing of applications under Sections 7, 9, and 10 of the Code for defaults occurring between March 25, 2020, and March 25, 2021. Siti Networks had obtained a loan of Rs 150 crore for a working capital facility, and the agreement stipulated the maintenance of a Debt Service Reserve Account (DSRA).