NCLT Mumbai: Initiated Insolvency Proceedings against Siti Networks Ltd

The National Company Law Tribunal, Mumbai Bench in the case Indusind Bank Ltd. v Siti Networks Ltd. wherein the bench comprising of Judicial Member, Shri H.V. Subba Rao and the Technical Member, Ms. Madhu Sinha, the court while adjudicating an application filed wherein the court has initiated Corporate Insolvency Resolution Process (“CIRP”) against Zee Entertainment Enterprises Ltd. Mr. Rohit Mehra has been appointed as the Interim Resolution Professional.
Facts of the Case
The Corporate Debtor, Siti Networks Ltd is engaged in the business of multi-system operator and provides television services across India. The Corporate debtor being a part of the Essel Zee Group promoted by Dr. Subhash Chandra and was a 100% subsidiary of erstwhile Zee Telefilms Ltd ( which is now Zee Entertainment Enterprises Ltd.).
Therefore, it has also been availed by the Corporate Debtor the credit facilities from the IndusInd Bank Ltd. (“Financial Creditor”) to the tune of Rs. 250 Crores and Rs. 150 Crores. Therefore, the Corporate Debtor entered into a Debt Service Reserve Agreement with the Financial Creditor and Zee Entertainment Enterprises Ltd. became the Guarantor under the DSRA.
However, the Corporate Debtor while defaulting in fulfilling its obligations under the DSRA. The Financial Creditor issued a Demand Notice dated 25.04.2022 to the Corporate Debtor, wherein a demand payment of Rs. 1,48,82,90,236.22/-. When the court did not received the payment, a plea has bene filed by the Financial Creditor under Section 7 of the Insolvency and Bankruptcy Code, 2016, wherein seeking initiation of Corporate Insolvency Resolution Process against the Corporate Debtor.
The court also initiated proceedings under Section 7 of IBC against the Guarantor of Corporate Debtor, i.e. Zee Entertainment Enterprises Ltd.

Verdict of NCLT:
It has also been opined by the bench that the existence of debt and default stand proved and there are no reasons to dismiss the Section 7 application. Therefore, the bench admitted the Corporate Debtor into CIRP and has appointed Mr. Rohit Mehra as the Interim Resolution Professional and the court appointed Mr. Rohit Mehra as the Interim Resolution Professional.