 "NCLT rejects IDBI Bank's insolvency plea against Zee Entertainment")
The National Company Law Tribunal in Mumbai rejected on Friday IDBI Bank's insolvency plea against Zee Entertainment Enterprises (ZEEL), paving the way for the media company’s merger with rival Sony Entertainment.
Zee defaulted on a loan of Rs 149 crore from IDBI Bank, prompting the lender to move the NCLT. IDBI Bank has the option to move the National Company Law Appellate Tribunal to appeal against the order, said a legal expert.
A separate petition filed by JC Flowers Asset Reconstruction Company and Axis Finance is pending in the NCLT against Subhash Chandra, the promoter of Zee and Essel Group. Zee Entertainment earlier paid $10 million (Rs 81 crore) to IndusInd Bank in an out-of-court settlement.
JC Flowers Asset Reconstruction Company (ARC) has asked NCLT to use the non-compete fees Chandra would receive from Sony Japan to repay its dues worth Rs 377 crore.
Chandra had given personal guarantees to loans extended by YES Bank to Essel Infrastructure which later turned bad. JC Flowers acquired Essel Group’s bad loans YES Bank in May last year and has moved the court to recover its dues.
JC Flowers has argued that as Chandra will receive a non-compete fees of Rs 1,100 crore from Sony in a Mauritius-based entity as part of a merger between Zee Entertainment Enterprises and Sony India's television business in India, the funds should be brought to India to repay lenders. Chandra plans to use the no-compete fees to increase the family stake in the merged entity from two per cent to 4 per cent.
Japan’s Sony Corp said on Thursday it expects to close the merger of its Indian subsidiary with ZEEL by September.