SC agrees to hear IDBI Trusteeship Services’ appeal against two Zee companies: Report

The Supreme Court has issued notices to two promoter companies of ZEEL-  Cyquator Media Services and Direct Media Distribution Ventures, agreeing to hear IDBI Trusteeship Services’ plea for insolvency proceedings, as reported by Mint.

IDBI Trusteeship moved to the apex court after National Company Law Appellate Tribunal (NCLAT) dismissed its insolvency petition against the Zee companies. NCLAT rejected IDBI’s appeal as the default in payment occurred in June 2020, a period excluded under Section 10A from the insolvency and bankruptcy code due to Covid-19.

IDBI raised concerns against the merger of Sony Pictures Networks India and Zee, filing an appeal against Subhash Chandra, former Zee chairman in the NCLAT. It claims that Chandra didn’t fulfil his promise of payment guarantee and hence he is also a debtor. 

The case started in 2015 when Essel Infraprojects, a subsidiary of Chandra’s Essel Group put forward a plan to sell 425 non-convertible debentures valued at Rs 425 crore through private placement with IDBI as the debenture trustee. Cyquator Media Services and Direct Media Ventures were named as corporate guarantors in this arrangement.  

IDBI activated the corporate guarantee clause when the debentures weren't paid back in May 2020, as agreed in the deal.

Axis Finance also lodged a similar petition with the NCLAT regarding the Sony-Zee merger. Challenges from creditors in various forums are posing legal obstacles to the $10 billion merger.