Zee Entertainment’s insolvency: CEO Punit Goenka moves NCLAT seeking relief against NCLT order

Goenka said that all necessary steps are being taken as per law to protect the interests of all stake holders of Zee Entertainment and to achieve timely completion of the proposed merger with Culver Max Entertainment Pvt. Ltd.

NCLT’s Mumbai bench on Wednesday allowed to initiate insolvency proceedings against Zee Entertainment. Sanjay Kumar Jhalani, and Mohit Mehra have been appointed as the interim resolution professionals for Zee Entertainment and Siti Network, respectively.

This would possibly delaying a merger with the local unit of Japan’s Sony Group Corp. Zee and Sony’s Indian unit are merging their television channels, film assets and streaming platforms to take on the likes of Netflix and Disney in India.

IndusInd Bank’s plea

The bankruptcy proceedings come after IndusInd Bank Ltd filed a petition with the NCLT against Zee over a default of ₹83.08 crore.

Zee had provided commitments for funding shortfalls in a debt service reserve account for Siti Networks, which had availed loans from various banks, according to multiple exchange filings.

The nature of financial cases pending will only delay the merger process with Sony, which is a big overhang for Zee’s stock and its valuation multiples, Elara Capital analyst Karan Taurani wrote in a note.

In a worst-case scenario, the Zee management can settle the claims to expedite the merger process. But that seems highly unlikely for now, Taurani said, adding that he did not foresee any reason for the merger being called off.

Zee had informed the exchanges in December that IDBI Bank filed an application under insolvency proceedings against the company over a default of 1.5 billion rupees for a loan availed by Siti.

Shares of Zee Entertainment Enterprises Ltd sunk to a 17-month low today after the company was admitted into insolvency proceedings. Zee’s shares, which have lost about 22% so far in 2023, tumbled as much as 14.4% before paring some losses. The stock fell 3.35 per cent to close at ₹199 a piece on the BSE today.