MUMBAI: Adding to Zee Learn’s ongoing financial struggles, Yes Bank has filed an insolvency petition against its wholly-owned subsidiary, Digital Ventures Pvt. Ltd., before the National Company Law Tribunal (NCLT). This move comes after a similar petition filed against Zee Learn itself in April 2023.
Mounting Debt and Missed Commitments:
- The petition cites Digital Ventures’ failure to honor loan commitments and mounting debt as reasons for seeking insolvency proceedings under Section 7 of the Insolvency and Bankruptcy Code.
- Zee Learn, known for its Kidzee preschool chain and Mount Litera Zee Schools, has been grappling with financial difficulties for some time.
- Last year’s debt settlement efforts seem to have been short-lived, and the company is now exploring asset sales to stay afloat.
Impact on Zee Learn and the Education Sector:
- This latest development raises concerns about the future of Zee Learn and its subsidiaries, potentially impacting thousands of students and employees.
- The insolvency process could lead to restructuring, asset sales, or even liquidation, casting uncertainty over the company’s future operations.
- Sonam Chandwani, managing partner at KS Legal and Associates, attributes Zee Learn’s troubles to “wrong bets in different verticals,” highlighting the risks of over-expansion and diversification.
- She further points to regulatory concerns adding to the company’s woes.
A History of Financial Challenges:
- In April 2023, Yes Bank claimed a default of Rs 468 crore by Zee Learn, triggering the initial insolvency petition.
- The company, despite operating a vast network of schools across India and neighboring countries, has struggled to maintain financial stability.
Shareholding and Future Prospects:
- HDFC Ltd and Rattan India Finance hold significant stakes in Zee Learn, with 4.85% and 6.42% ownership, respectively.
- The outcome of the insolvency proceedings will have implications not only for Zee Learn and its subsidiaries but also for the education sector and its stakeholders.