UPDATE: India’s National Company Law Appellate Tribunal (NCLAT) on Friday stayed the insolvency proceedings against Zee, after MD and CEO Punit Goenka appealed against the order issued on Wednesday. NCLAT will next hear the matter on March 27.

“We respect the decision taken by the Hon’ble National Company Law Appellate Tribunal (NCLAT) and remain committed towards protecting the interests of all stakeholders. Our focus continues to be on the timely completion of the proposed merger,” Goenka said in a statement.

PREVIOUSLY: India’s National Company Law Tribunal on Wednesday agreed to the beginning of insolvency proceedings against Zee Entertainment Enterprises Limited (ZEEL) and group company Siti Network, filed by IndusInd Bank.

The bank is seeking payment over a default of INR890 million ($10.7 million). Siti and Zee are part of the Essel Group conglomerate.

In 2021, Culver Max Entertainment (Sony) and ZEEL signed definitive agreements to merge and combine their linear TV networks, digital assets, production operations and program libraries. The merger is understood to be in the last stages of completion.

“We remain committed towards the proposed scheme of amalgamation for the merger of Zee Entertainment Enterprises Ltd. with and into Culver Max Entertainment Pvt. Ltd. We will continue to take all the required measures to achieve a timely completion of the same, guided by legal advice, in the interest of our stakeholders, who have recognized the value and potential of the merger,” said a statement from ZEEL MD and Punit Goenka shared with Variety.

ZEEL share value fell by 14.4% on Thursday in reaction to the insolvency proceedings news.

Zee has challenged the insolvency proceedings with the National Company Law Appellate Tribunal (NCLAT). “Mr. Punit Goenka has filed an appeal in the Hon’ble National Company Law Appellate Tribunal (NCLAT) today, seeking relief against the order passed by the Mumbai bench of the National Company Law Tribunal (NCLT). Mr. Goenka is taking all the necessary steps as per law, to protect the interests of all stakeholders of Zee Entertainment Enterprises Ltd. (ZEE) and to achieve a timely completion of the proposed merger with Culver Max Entertainment Pvt. Ltd. Mr. Goenka firmly believes in the potential of the merger, to deliver immense value to all stakeholders. ZEE is a debt-free & financially strong company, and believes in value creation for its stakeholders,” Goenka’s office said in a statement.

The insolvency proceedings could delay the merger but is unlikely to scupper it, according to media analyst Karan Taurani of Elara Securities.

“We believe there is little, or no likelihood of the merger being called off, as the linear TV industry is going through concerns, which has impacted growth rates for Sony too. There may be a delay in terms of timeline for the merger process to go through, which could be anywhere in a wide range of 3-12 months, basis outcome of the other pending liability cases/Zee’s appeal with NCLAT. We thereby believe that Zee remains to be a compelling buy, if one were to factor that the merger will go through in the medium term with synergies in the linear TV and OTT business,” Taurani said, also pointing to Zee’s hefty cash balance of INR7 billion, with a further INR 120 billion to be infused post-merger with Sony.