In a relief to Zee Entertainment Enterprises (Zee) MD Punit Goenka, the National Company Law Appellate Tribunal (NCLAT) on Friday stayed insolvency proceedings against the media company.
It directed financial creditor IndusInd Bank to file its reply in two weeks & Zee to file a rejoinder in 2 weeks thereafter. It listed the matter for final disposal on March 29 and, till that time, the Feb 22 order passed by the Mumbai bench of the National Company Law Tribunal (NCLT) is on hold, the NCLAT ruled.
IndusInd had initiated insolvency proceedings against Zee after its sister-concern Siti Networks defaulted on a loan of Rs 93 crore. The media major was the guarantor for the loan. On Wednesday, the NCLT had admitted IndusInd’s insolvency plea against Zee. Subsequently, Goenka in his personal capacity challenged the NCLT order.
IndusInd’s lawyer submitted before the NCLAT that there are huge dues on Goenka & that he should be directed to deposit a certain amount. The NCLAT has asked Goenka’s lawyer to obtain instruction on the said submission. “Goenka will have to respond to this (IndusInd submission) in March,” said a source close to Goenka. “He doesn’t have to deposit anything now. The order too doesn’t say anything on that front.” The case comes at a time when Zee is in advanced stages of merging with Sony Pictures Networks India (SPNI), now known as Culver Max Entertainment. Though Goenka expects a timely completion of the merger, analysts see a delay. The final NCLT hearing on the Zee-SPNI deal was scheduled for March 9.
“We respect the decision taken by NCLAT & remain committed towards protecting the interests of all stakeholders. Our focus continues to be on the timely completion of the proposed merger,” read a statement from Goenka’s office. Goenka owns nearly 4% in Zee, which was founded by his father in 1992.
The NCLAT order led to an initial revival in Zee’s stock price on Friday, but the weak market trend pulled it down to a lower close. After rallying to an intraday high of Rs 205, up 3% on the day, the stock on the BSE closed at Rs 196, down 1.6%. It was the second consecutive session of a lower close for the stock.
On Thursday, soon after the news broke about the NCLT accepting an IBC petition against the media company, the stock had lost over 14%, but late buying helped it to narrow the loss & close 3.5% down.
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