Comments
The National Company Law Appellate Tribunal (NCLAT) has put a stay on the order which allowed the initiation of insolvency proceedings against Zee Entertainment.
The stay order means that the ongoing merger between Zee Entertainment and Sony Pictures can go ahead as per the deal announced last year. Punit Goenka, Chief Executive Officer, Zee Entertainment said he is looking to complete the merger deal with Sony Pictures at the earliest.
“We respect the decision taken by the Hon’ble National Company Law Appellate Tribunal (NCLAT) and remain committed towards protecting the interests of all stakeholders. Our focus continues to be on the timely completion of the proposed merger,” Goenka said.
Goenka had filed an appeal in NCLAT, seeking relief against the order passed by the Mumbai bench of the National Company Law Tribunal (NCLT) which allowed IndusInd Bank to initiate insolvency proceedings against Zee Entertainment. Zee was the guarantor for IndusInd Bank’s ₹150 crore loan to Essel Group’s Siti Networks. It had failed to honour the debt service reserve account guarantee agreement (DSRA). The shortfall amounted to ₹83 crore. IndusInd Bank claims that ZEEL had undertaken obligation to meet any shortfalls in debt repayment by Siti Networks. “IndusInd’s move to drag Zee into the issue between the bank and Siti can threaten to derail the entire merger process. Most of the lenders to Zee are in support of the merger with Sony so putting the company under insolvency may not have found favour with the Committee of Creditors,” said an industry expert.
“Goenka should rush through with the process and complete the merger soon before it gets derailed,” said another expert.
“Goenka is taking all the necessary steps as per law, to protect the interests of all stakeholders of Zee Entertainment Enterprises Ltd (ZEE) and to achieve a timely completion of the proposed merger with Culver Max Entertainment. Goenka firmly believes in the potential of the merger, to deliver immense value to all stakeholders. ZEE is a debt-free and financially strong company, and believes in value creation for its stakeholders,” the office of Punit Goenka had said in a statement on Thursday.
Zee Entertainment stocks were under pressure since Thursday morning after NCLT allowed a petition by IndusInd to initiate a debt resolution process against the media company.
At today’s hearing before NCLAT, Goenka’s legal team said that Zee is not the principal debtor to IndusInd and therefore cannot be dragged to insolvency.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.