Post merger collapse, legal battles begin with ZEE approaching NCLT

After the $10 billion ZEE-Sony merger deal fell through in a spectacular manner two days back, stage is set for a long-drawn legal battle with both organisations digging their heels. After categorically denying all the assertions raised by Culver Max Entertainment (formerly Sony Pictures Networks India) and Bangla Entertainment Pvt Ltd (BEPL) on the alleged breaches under the terms of the Merger Co-operation Agreement (MCA), including their claims for the termination fee, Zee Entertainment Enterprises Ltd has now approached the National Company Law Tribunal (NCLT) Mumbai as well as the Singapore International Arbitration Centre against Sony’s decision to terminate the merger deal.

In a filing to the bourses, ZEEL stated, “The Company is evaluating all available options and basis the guidance received from the Board and will take all necessary steps to safeguard the long-term interests of its stakeholders, including by taking appropriate legal action and contesting Culver Max and BEPL’s claims in the arbitration proceedings.”

ZEEL further stated, “Pursuant to Regulation 30 read with Schedule III of the SEBI Listing Regulations, we wish to inform that basis the authorisation of the Board of Directors of the Company, the Company has undertaken the following actions:

The Company issued a reply to Culver Max and BEPL inter alia specifically denying any breach of its obligations under the MCA and reiterated that the Company has complied with all its obligations in good faith. The Company has denied that Culver Max and BEPL are entitled to terminate the MCA and the claim for termination fee is legally untenable and has no basis whatsoever. The Company asserted that Culver Max and BEPL are in default of their obligations to give effect to and implement the Scheme, sanctioned by the Hon’ble National Company Law Tribunal.
The Company has called upon Culver Max and BEPL to immediately withdraw the termination and confirm that they will perform their obligations to give effect to and implement the Merger Scheme, sanctioned by the Hon’ble National Company Law Tribunal. The Company has reserved all its rights in this regard.
The Company approached the Hon’ble National Company Law Tribunal, Mumbai bench inter alia seeking directions to implement the merger scheme.
The Company initiated appropriate legal action to contest Culver Max and BEPL’s claims in the arbitration proceedings before Singapore International Arbitration Centre (SIAC).