Shares of Zee Entertainment Enterprises (ZEEL) were locked in a 10% lower circuit limit in the opening trade on Thursday after the National Company Law Tribunal’s (NCLT) Mumbai bench allowed initiation of insolvency proceedings against the Essel Group company. Admitting a petition filed by IndusInd Bank, the tribunal has appointed Sanjay Kumar Jhalani as the interim resolution professional (IRP) for the process.
The bankruptcy court admitted the case after ZEEL failed to fulfil its debt obligations to IndusInd Bank regarding the payment of more than ₹83 crore loan issued to Siti Networks. The court has also admitted IndusInd’s insolvency plea against Siti Networks and appointed an interim resolution professional.
In February last year, private sector lender IndusInd Bank filed a bankruptcy case against debt-laden Zee Entertainment with the NCLT under the Insolvency and Bankruptcy Code (IBC). The case pertains to alleged default of ₹83.08 crore term loan facility issued to Siti Networks, a cable TV operator promoted by Essel Group. Zee was a party to the Debt Service Reserve Account Guarantee Agreement (DSRA Guarantee Agreement) signed with lnduslnd Bank for the term loan facility advanced to Siti Networks.
Weighed down by the development, Zee Entertainment shares opened 5% lower at ₹195.30 against the previous closing price of ₹205.90 on the BSE. The stock soon hit its lower circuit limit of 10% to touch its 52-week low of ₹181.50 mark. On the volume front, there was a surge in selling activities as 7.5 lakh shares changed hands over the counter as compared to the two-week average volume of 2.98 lakh stocks. The market capitalisation stood at ₹17,193 crore.
The stock has fallen in the last eight out of the nine sessions and dropped 21% during this period. The stock is down 42% against its 52-week high of ₹308.65 touched on April 4, 2022. The midcap stock has given a negative return of 22% to its shareholders in the last one year, while it shed 27% in a six-month period. On a year-to-date basis, the stock has fallen 22.7%, while it slides 16% in a month.
ZEEL in an exchange filing on Wednesday confirmed the NCLT's Mumbai Bench has pronounced its order in a petition filed by IndusInd Bank against the company under Section 7 of the Insolvency and Bankruptcy Code, 2016, admitting the company to corporate insolvency resolution process under the provisions of the code.
In December, private lender IDBI Bank moved NCLT seeking initiation of insolvency proceedings against ZEEL, claiming ₹149.60 crore of default under a debt service reserve agreement entered into by the bank and the company for the financial facility availed by Siti Networks. Besides, in April last year, Housing Development Finance Corporation Ltd (HDFC) also filed an insolvency application against Siti Networks Ltd for alleged default of ₹296 crore.