Zee-Sony Merger: NCLAT Declines Stay On Deal
Essel Group creditors Axis Finance and IDBI Bank had contested the merger, and the NCLAT has issued notices in response.
The National Company Law Appellate Tribunal on Friday declined to grant a stay on the merger between Zee Entertainment Enterprises Ltd. and Sony India Pvt.
Axis Finance Ltd. and IDBI Bank Ltd. had contested the merger, and the NCLAT has issued notices in response to their pleas, scheduling the case for a hearing on Jan. 8, 2024.
In the previous hearing on Oct. 31, a different bench had transferred both petitions to the chairperson's bench, considering that the chairperson-led bench was already hearing an insolvency appeal filed by IDBI Bank against ZEEL.
IDBI Bank and Axis Finance objected to the approval granted by the NCLT in August for the Zee-Sony merger, which aimed to create the largest media entity in the country.
The merger, initially finalised in December 2021, faced delays due to objections raised by Essel Group creditors, including Axis Finance, JC Flowers Asset Reconstruction Co., IDBI Bank, IDBI Trusteeship Ltd., and Imax Corp.
The main point of contention centered around a non-compete clause in the merger scheme. This clause stated that Essel Mauritius, an Essel Group company, was entitled to receive Rs 1,100 crore as non-compete fees from SPE Mauritius, a company within the Sony Group.
In return, Subhash Chandra, the chairperson of Essel Group, agreed not to compete with the resulting entity formed by the Zee-Sony merger. The NCLAT has now called for ZEEL's response to the appeals.
