NCLAT stays Zee Entertainment’s insolvency: What we know so far

Admitting a petition filed by Punit Goenka, the chief executive of ZEEL, the appellate tribunal issued notices to IndusInd bank and the interim resolution professional directing them to file a reply in two weeks.

Here’s what has happened so far

– The National Company Law Tribunal (NCLT) on Wednesday admitted a petition filed by IndusInd Bank Ltd to initiate insolvency proceedings against ZEEL.

– The division bench of judicial member H V Subba Rao and technical member Madhu Sinha has also appointed Sanjeev Kumar Jalan as the resolution professional in the matter.

– The matter pertains to a default of ₹89 crore by Zee Group’s multisystem operator arm Siti Networks claimed by Indusind Bank, for which ZEEL was a guarantor.

– IndusInd Bank has also filed a separate insolvency petition against Siti Networks at the NCLT. The NCLT has appointed Mohit Mehra as the resolution professional in this matter.

– The NCLT has admitted the plea at a time when ZEEL is in advanced stages of merging with Sony in one of the biggest deals in the media and entertainment sector.

– It is likely that the proposed merger between Zee and Sony will be delayed by the latest legal developments.

– Experts believe the development is bound to create hurdles in the deal, with some opining that the powers of a company board stand superseded with the admission of insolvency plea.

– On Thursday, ZEEL boss Goenka challenged the insolvency proceedings initiated against the company.

– Goenka has filed an appeal with the quasi-judicial NCLAT, and still expects a timely completion of a merger with the local unit of Japan’s Sony Group Corp, the statement said.

– “Punit Goenka is taking all the necessary steps to protect the interests of all stakeholders of Zee to achieve a timely completion of the proposed merger (with Sony),” the statement said, adding that the company is a “debt free and financially strong company.”

– On Friday, NCLAT stayed the insolvency proceedings against Zee, saying the matter required detailed deliberations and will be next heard on 27 March.

– NCLAT said the submissions made by both sides need a detailed hearing.

– During the hearing, Zee counsel Mukul Rohatgi warned its merger with Sony is “going to get stuck” if the insolvency proceedings continue.

– “Our focus continues to be on the timely completion of the proposed merger,” Goenka said after the decision.

Stock impact

On Friday, shares of ZEEL trimmed most of its early losses and ended nearly 2 per cent lower.

The stock settled 1.58 per cent lower at ₹195.60 apiece on the BSE. During the day, it declined 4.60 per cent to ₹189.60.

On the NSE, it settled at ₹195.45 each share, lower by 1.61 per cent after falling 5.36 per cent to ₹188 during the day.

In volume terms, 10.91 lakh shares of the firm were traded on the BSE and over 3.73 crore shares on the NSE during the day.

With agency inputs