The chief executive of Zee Entertainment Enterprises (Zee) has challenged insolvency proceedings initiated against the company by India’s bankruptcy court, according to a statement from his office yesterday

Punit Goenka has filed an appeal with the quasi-judicial National Company Law Appellate Tribunal, and still expects a timely completion of a merger with the local unit of Japan’s Sony Group Corp, the statement said, according to a Reuters report from Bengaluru.

The Zee network, set up in 1992, had a network share of 16.2 percent as of December 31 2022. The deal with Sony was set to vault the companies into pole position over Disney’s Star India.

Shares of Zee Entertainment sank to a 17-month low earlier in the day after it was taken in for insolvency proceedings, raising fears of possible delays on the Zee-Sony merger, aimed at creating a $10 billion media powerhouse in India.

The cases pending against Zee will only delay the merger process with Sony, a big overhang for Zee’s stock and its valuation multiples, Elara Capital analyst Karan Taurani, who does not expect the deal to fall through, said in a note.

The bankruptcy proceedings come after IndusInd Bank Ltd filed a petition against Zee Entertainment over a default of  Rs. 830.80 million ($10.04 million).

“Punit Goenka is taking all the necessary steps to protect the interests of all stakeholders of Zee to achieve a timely completion of the proposed merger (with Sony),” the statement said, adding that the company is a “debt free and financially strong company”.

The Sony Group did not respond to a Reuters’ request for comment.

Zee had acted as a guarantor for loans availed by digital cable television service provider Siti Networks, a sister company owned by conglomerate Essel Group.

IndusInd invoked the guarantee when Siti defaulted the payment, multiple exchange filings show.

Zee had informed the exchanges in December that IDBI Bankhad also filed an application under insolvency proceedings against the company over a default of Rs. 1.5 billion for a loan availed by Siti.