InvestorQ : Why has Yes bank dragged Zee Entertainment to court?
Ria Jain made post

Why has Yes bank dragged Zee Entertainment to court?

Anu Biswas answered.
12 months ago

Under the new management, Yes Bank has filed a suit against Zee Entertainment and its board of directors, including founder Subhash Chandra and CEO Punit Goenka. The case has been filed in the Bombay High Court over alleged the Zee group’s failure to honour obligations under a disputed guarantee related to a 2016 loan of an amount of $50 million.

Yes Bank has expressed concerns that Zee Entertainment deliberately defaulted on the loan and it has sought the dues to be paid back in the suit. Yes Bank also urged the Bombay HC to restrain Zee from disposing of assets to third parties. Zee had sought interim relief from the Bombay High Court which has been denied by the court, as per information given by Zee.

Yes Bank has contended that Zee Entertainment had obligations as a guarantor for the foreign currency term loan of $50 million under a letter of comfort issued in May 2016. This alleged liability has been disputed by Zee Enterprises in a case where they have tried to draw a fine line of distinction between a letter of comfort and a personal guarantee.

Yes Bank has also alleged that the Subhash Chandra group diluted its shareholding in Zee in violation of the lending terms. The covenants stipulated that promoters maintain minimum 30% shareholding in Zee until the loan was repaid. Considering that it was also an audit lapse, Yes Bank has also made the auditor Deloitte Haskins & Sells a party to the case.