On Thursday, the National Company Law Appellate Tribunal (NCLAT) held its decision on the petitions filed by IDBI Bank and Axis Bank, contesting the now-canceled Zee-Sony merger.
Scheduled for April 15, the appellate tribunal will determine whether challenges to the legal approval of the Zee-Sony merger can proceed given the merger’s cancellation.
IDBI Bank and Axis Bank had requested NCLAT to postpone the case until the National Company Law Tribunal (NCLT) decides on Zee’s plea regarding the merger’s enforcement. However, Zee argued that the pending plea in NCLT shouldn’t affect the ongoing case and urged NCLAT to continue its hearing.
Previously, the Mumbai bench of NCLT had sanctioned the merger of Zee Entertainment and Sony Pictures Networks India (SPNI) on August 10, paving the way for a $10-billion media giant in India. However, dissenting creditors, including Axis Finance, JC Flower Asset Reconstruction Co, and IDBI Bank Ltd, contested the merger, mainly due to a non-compete clause. This clause involved an Essel Group company receiving ₹1,100 crore as non-compete fees from a Sony Group company in exchange for Subhash Chandra’s commitment not to challenge the merged entity.
Despite NCLAT’s refusal to grant an interim stay on the merger in December, the mega-merger was called off on January 22, primarily due to disagreements over the leadership of the combined entity. While ZEEL MD and CEO Punit Goenka were initially agreed upon as the leader, Sony reportedly sought a reevaluation after Goenka became the subject of a SEBI probe.
Following the termination, Zee approached NCLT Mumbai for the merger’s implementation, alleging premeditation and claiming costs of ₹700 crore ($80 million) incurred in preparation for the merger. Sony, on the other hand, initiated emergency arbitration proceedings against Zee before the Singapore International Arbitration Centre (SIAC), seeking to prevent Zee from pursuing legal remedies in various forums.
However, on February 4, SIAC rejected Sony Group’s emergency petition against Zee Entertainment Enterprises’ plea before India’s insolvency tribunal seeking merger scheme implementation with Sony’s local unit.
