NCLT admits insolvency plea against Zee Learn

The Mumbai bench of the National Company Law Tribunal has admitted the insolvency petition against Zee Learn, a school education solution provider, for defaulting on a payment of Rs 469 crore to Yes Bank.

Out of total default amount, the principal amount is Rs 410 crore and Rs 59 crore is the amount of interest. The date of default is 02 August 2021.

In an exchange filing, the Zee Group company informed that pursuant to an order dated 10 February 2023 of the National Company Law Tribunal, Mumbai, Corporate has been initiated against Zee Learn Limited.

Yes had issued Facility Letters dated 30 March 2016 in respect of three borrowers — Zee Learn Education Society, Gyanmala Public Education Trust and Mount Litera Education Foundation – and extended term loans and overdraft facility totalling Rs 160 crore.

Yes Bank against entered into a loan agreement with Zee Learn, and extended term loans of Rs 310 crore in two tranches March 2018 to Taleem Research Foundation.

Zee Learn provided the Guarantee for the above loans.

Yes Bank in its petition had contended that it is undisputed that the principal borrower has failed to pay. The Notices of Demand was issued to the Guarantor pertaining to the debt and default.

“The fact that the aforesaid financial debt is due and payable to the Financial Creditor is self-evident from the records maintained by the Central Repository of Information on Large Credits (CRILIC), in respect of the Principal Borrowers,” observed the Financial Creditor.

CRILIC is a database set up by the Reserve Bank of India to collect, store and disseminate credit data to lenders. 16. The CRILIC records show that each of the Principal Borrowers is in default in respect of the principal debt, and therefore that the Financial Creditor was entitled to invoke the Guarantee.

Zee Learn in its submission has said that it is only the guarantor and that it never defaulted on the loans it has taken from Yes Bank. It also prayed the tribunal that Zee Learn is in the field of education and runs pre-school centres (Kidzee) in 800 cities in India as more particularly set out hereinafter. An order of admission against the it will cause severe financial loss and prejudice to it apart from disrupting the academic year of its students and affecting the livelihood of its teachers and staff.

However, the NCLT rejected most of the contentions of the corporate debtor, and admitted the insolvency application. The tribunal appointed Rohit Mehra as the interim resolution professional.

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