Mumbai Court dismisses Phantom Studios’ bid to enforce Zee-Sony merger scheme

The Bankruptcy Court in Mumbai recently dismissed an application filed by Phantom Studios India (PSIPL) that sought to implement the merger scheme between Zee Entertainment Enterprises Limited (ZEEL) and Sony Group companies, Bangla Entertainment Private (BEPL) and Culver Max Entertainment (CMEPL).

PSIPL, formerly known as Mad Man Film Ventures, held approximately 1.3 million shares of Zee Entertainment, valued at around ₹50 crore, at the time of its tribunal filing. Last month, the tribunal officially revoked its approval for the proposed $10 billion merger between ZEEL and Sony's Indian media units, CMEPL and BEPL.

"During the course of the hearing, we were informed that PSIPL attended the shareholder meeting and voted in favor of the scheme. As Section V, Paragraph 10 allows withdrawal by parties, PSIPL cannot insist on the scheme’s implementation," stated the division bench, consisting of Judicial Member Lakshmi Gurung and Technical Member Charanjeet Singh Gulati, in its October 24 order.

The companies also argued that the tribunal lacked the authority to enforce a scheme that had not taken effect and noted that the scheme's approval was conditional.

In August, ZEEL and Sony's Indian units reached a non-cash settlement to resolve all disputes stemming from their failed merger. Both companies agreed to withdraw claims in the ongoing arbitration at the Singapore International Arbitration Centre and related proceedings in the NCLT.

This settlement, focused on independently pursuing future growth, followed Sony’s January termination of the merger, citing ZEEL's unmet closing conditions and leadership disagreements. Sony subsequently filed a $90 million arbitration claim against ZEEL.