Zee mired in legal disputes in run-up to merger with Sony

livemint.com:

MUMBAI : Even as Zee Entertainment Enterprises Ltd (ZEEL) founder Subhash Chandra and his son Punit Goenka await clean chit from the market regulator over financial irregularities in the media house, the company itself is entangled in a series of legal disputes, including tax claims, regulatory filings showed. While Zee Entertainment proceeds with its planned merger with the Indian arm of Japan’s media behemoth Sony Group Corp’s entertainment division, the filings showed that Zee is dealing with at least a dozen lawsuits, involving cases filed by the Income Tax department, the Commissioner of Service Tax, the Director General of GST Intelligence, and several lenders.

Zee Entertainment, in the filings, said such cases are not “reasonably" expected to have any material financial impact. But, the amounts involved in disputes run into hundreds of crores and are related to issues including non-payment of tax, utilization of input tax credit, and loan repayment defaults.

As per the regulatory filings, private lenders such as Yes Bank, IDBI Bank, and Aditya Birla Finance Ltd have filed separate cases against Zee and other promoter entities. The total amount of liability arising from these cases is around ₹798 crore.

These cases are being reviewed before different courts. Yes Bank’s case alleges that Zee, Chandra, Punit Goenka (Chandra’s son and MD & CEO of Zee), certain promoter group entities, Axis Bank, and Deloitte Haskins & Sells Llp have breached terms of a LOC with regards to a loan default.

The quantum of claim is ₹428.5 crore. “In the suit, Yes Bank has sought a declaration that a LOC dated 31 May 2016, given by ZEEL to Yes Bank, in respect of a loan given to Living Entertainment Ltd, is a guarantee to Yes Bank and that