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Punit Goenka files appeal against NCLT's insolvency order before NCLAT
IndusInd Bank filed a petition with the NCLT against Zee over a default of around Rs 80 crore.
Punit Goenka, MD and CEO of Zee Entertainment Enterprises Ltd, has filed an appeal in the National Company Law Appellate Tribunal (NCLAT) on Thursday to obtain relief from yesterday's ruling by the Mumbai bench of the National Company Law Tribunal (NCLT).
On Wednesday, NCLT's Mumbai bench admitted an insolvency petition against Zee Entertainment by its financial creditor IndusInd Bank. The bank filed the petition citing Zee's default of Rs 83.08 crore.
Reports suggest that Zee had agreed to be the guarantor for funding shortfalls in a debt service reserve account for Siti Networks, which had obtained loans from various banks.
The nature of the pending financial cases are expected to delay Zee's merger with Culver Max Entertainment (Sony), says Karan Taurani, senior vice president, Elara Capital.
After receiving conditional approvals from the Competition Commission of India (CCI), the stock exchanges and the company's shareholders, Zee had submitted a plea in NCLT in January, applying for the merger. The next NCLT hearing was supposed to be on March 9.
"In case the NCLAT hearing goes in their favour before March 9, there may be a likelihood of NCLT approving the merger plea. We had estimated a timeline of 3-4 months for NCLT approval. However, complications in the above pending liabilities will delay this by at least another 2-3 months," he said.
Taurani asserted that he doesn't see any reason for the merger being called off. "Worst case, Zee management can settle the above claims and amount with the banks in order to expedite the NCLT merger process, which seems highly unlikely for now," he says.
However, in a statement, 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.
"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 statement said.