Zee Entertainment Enterprises Ltd (ZEEL) is the news maker today; the stock price, ruling the rooster among the losers, it fell over 14% to hit a new 52-week low at Rs.176.60; it has recovered from there and is now trading 7.5% lower at Rs.190.45. Volumes are up 5x.

The stock hit the bottom after the Mumbai bench of NCLT yesterday admitted an insolvency petition against the company, filed by its creditor, IndusInd Bank.

This was filed after the company failed to fulfill its obligation under a Debt Service Reserve Account Agreement between the bank and Siti Networks, a part of the Essel group.

Zee had guaranteed IndusInd Bank's Rs 150 crore loan to Siti Networks and it has been a continuous defaulter. Zee, under the agreement, had guaranteed to maintain such an amount, which it failed to do and because it was a guarantor, it has been made liable.

All this bang in the middle of ZEEL’s planned merger with Culver Max Entertainment Pvt., an indirect, wholly owned subsidiary of Sony Group Corp.

Our Editor, Mr.S Tulsian feels this is a knee jerk reaction; the promoters will pay up the Rs.150 crore due and settle the matter as they too want the merger with Sony to happen.