Share of Zee Entertainment (ZEEL) had hit its previous 52-week low on June 20, 2022 at Rs 200.50. With today’s fall, the stock is now down 43 per cent from its 52-week high of Rs 308.65 that was touched on Apri 4, 2022.
The Mumbai bench of the National Company Law Tribunal (NCLT) on Wednesday admitted an insolvency petition media company Zee Entertainment Enterprises Ltd (ZEE) filed by its financial creditor IndusInd Bank, under Section 7 of the Insolvency and Bankruptcy Code (IBC).
IndusInd Bank in its plea has claimed a default of ₹83.08 crore against the media and entertainment firm promoted by Subhash Chandra. According to reports, the court has appointed Sanjay Kumar Jhalani as the interim resolution professional.
The bankruptcy court admitted a petition filed earlier by IndusInd Bank, which had moved the court seeking a payment of more than Rs 83 crore from ZEEL. This came after ZEEL failed to fulfil obligations under a Debt Service Reserve (DSR) account agreement.
Under the terms of the DSR account agreement, which was signed between the lender and Siti Networks (another Essel Group firm), ZEEL was also a party to it. ZEEL had guaranteed to maintain an amount equal to one quarter’s interest and one quarter’s principal in the account for servicing the debts but failed to do so.
Siti Networks, formerly Wire and Wireless, is a multi-system operator promoted by Essel Group.
The court has also admitted IndusInd’s insolvency petition against Siti Networks and appointed an interim resolution professional.
According to IndusInd Bank’s petition, Siti had failed to maintain the account since September 2019, with the dues amounting to Rs 89 crore. It had also stated that ZEEL, being the guarantor, should be also made a party in the case.
ZEEL had stated that IndusInd Bank’s petition was a “breach or violation” of previous orders passed by the Delhi High Court. In February 2022, the company had moved an application before the NCLT requesting the dismissal of IndusInd Bank’s plea.
In January, Indian Performing Right Society (IPRS), an operational creditor to ZEEL, had filed an insolvency petition before the NCLT Mumbai bench against the media firm claiming Rs 211.42 crore of debt. On its part, ZEEL had said the creditor is claiming debt and default towards royalty payable for utilisation of “literary and musical works”.
In the third quarter, the media company reported a 92 percent year-on-year decline in consolidated profit at Rs 24.31 crore, dented by weak operating performance, lower topline and exceptional loss (Rs 168.97 crore).
Consolidated revenue from operations at Rs 2,111.2 crore fell by 0.07 percent compared to year-ago period hit by lower advertisement revenue, down 15.6 percent on-year.
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