Zee Entertainment Enterprises Ltd received major relief when the National Company Law Appellate Tribunal (NCLAT) dismissed an insolvency petition filed by IDBI Bank. The tribunal decided that the default qualified for exclusion from insolvency proceedings under Section 10A of the Insolvency and Bankruptcy Code (IBC) 2016 because it occurred during the COVID-19 period.
Zee Entertainment Enterprises Ltd established that its guarantee limited to interest payments of the ₹50 crore loan for Siti Networks excluded coverage of the entire debt amount. The tribunal established that the demand notice issued by IDBI Bank in March 2021 came within the time frame protected by the pandemic.
Zee Entertainment Enterprises Ltd started the dispute through a 2012 agreement which required the company to maintain a debt service reserve account. The bank invoked this guarantee in March 2021 when the borrower account had already become an NPA since December 2019.
The tribunal granted IDBI permission to pursue a new case if the default occurred beyond Section 10A’s time limitations. Zee resolved an earlier insolvency case filed by IndusInd Bank through a settlement agreement.
