The proposed merger between Zee Entertainment Enterprises Limited (ZEEL) and Sony (NYSE:SONY) Pictures Networks India has encountered a legal hurdle as IDBI Trusteeship Services Limited (ITSL) appeals against the National Company Law Tribunal's (NCLT) approval of the deal. ITSL is contesting on grounds that Subhash Chandra, Zee's founder, breached a personal guarantee from 2019, seeking over Rs. 500 crore ( Rs 1 crore = $119,982.20) in repayment.
The National Company Law Appellate Tribunal (NCLAT) received ITSL's appeal on Friday, which specifically targets Chandra for not fulfilling a personal guarantee linked to Essel Infraprojects Limited (EIL) debentures amidst the merger process. This appeal follows the NCLT Mumbai bench's approval on August 10 for the ZEEL-Sony amalgamation, which is expected to create a significant entity in the media landscape.
In response to ITSL’s claims, ZEEL has maintained that ITSL does not have creditor rights over the company. This stance was supported by the NCLT, which suggested that ITSL’s challenge might be an alternative recovery tactic for alleged dues. The hearing on this matter was postponed due to a reassignment of the case to another bench.
Despite these legal challenges, ZEEL has been proactive in its merger efforts with Sony, spending Rs 176.2 crore on integration activities. The company has also stated that it has settled disputes with other creditors, including IDBI Bank and IndusInd Bank.
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