Zee Entertainment on Thursday was trading at its lowest in 17 months after NCLT admitted insolvency plea filed by IndusInd Bank against the company.
The shares of the company were down by 9% to ₹187.20 on BSE at the time of writing the story.
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.
According to the filing, ZEEL is a party to the Debt Service Reserve Account (DSRA) Guarantee Agreement entered into with IndusInd Bank for the term-loan facility advanced to another Essel Group firm, Siti Networks Ltd.
Under the terms of the DSRA agreement between the bank and Siti Networks - to which Zee is also a party - the Essel group firm had guaranteed the bank's ₹150 crore loan to the latter. Despite assurances, Zee had failed to maintain an amount equal to one quarter's interest and one quarter's principal at all times in the account - for the purpose of servicing its debts.
The bank claims that Siti had failed to maintain the account since September 2019, with the dues amounting to ₹89 crore. It argues that Zee should also be held liable as a guarantor.
Zee Entertainment in December last year had announced its merger with Sony Pictures Networks India Pvt Ltd (SPNI) after signing definitive agreements.