Shares of Zee Entertainment Enterprises (ZEEL) fell 14% in early trade on Thursday to hit a new 52-week low of Rs 176.60 per share after the National Company Law Tribunal (NCLT) accepted IndusInd Bank’s bankruptcy filing against the company. Incorporate it into the company’s bankruptcy resolution process.

The media company’s share price hit a new 52-week low of Rs 200.50 on June 20, 2022. With today’s drop, the stock was down 43% from its 52-week high of Rs 308.65 on April 4, 2022.

At 10:12 am, the stock pared some of its losses, down 9%. The bankruptcy court’s order is in response to a petition lodged by IndusInd Bank under Section 7 of the Bankruptcy Code (IBC), 2016.

According to a report by the Economic Times, the move has likely overshadowed ZEEL’s merger with Culver Max Entertainment (Sony), as after the initiation of insolvency proceedings, schemes like mergers and amalgamations will not be possible until ZEEL’s promoters settle the dues with the lender, the report said quoting an expert.

In December 2021, Sony and ZEEL merged their respective TV channels, movie properties and streaming platforms. IndusInd Bank has approached NCLT over ZEEL for more than Rs 89 crore liquidated damages.

Also, some of ZEEL’s lenders, including IndusInd, Axis Bank and IDBI Bank, opposed its merger with Sony and filed a petition with NCLT. Banks reportedly believed that ZEEL should settle its arrears before the merger.

In addition, ZEEL reportedly guaranteed a loan worth Rs 150 crore from IndusInd Bank to Siti Networks, another Essel group company. NCLT also admitted a separate request to initiate insolvency proceedings against Siti.

As the situation unfolds, Punit Goenka, MD and CEO of ZEEL, said the company remains committed to the merger with Sony and will continue to take the necessary steps to complete the merger promptly.

Shares of Zee Entertainment have been negatively skewed over the past three months, falling more than 33% over the same period.

With today’s sharp drop, the stock is trading below the lower end of its Bollinger Bands on the daily and weekly charts. So, the bias may remain quite bearish if the stock stays below Rs 198.

The monthly chart suggests the stock may find support near the trend line in the Rs 160-old level.

If the support at Rs 160 holds, the stock may attempt a pullback towards Rs 230-plus levels in the coming sessions.