(Bloomberg) -- A bankruptcy court in India has begun insolvency proceedings against Zee Entertainment Enterprises Ltd.’s founder and chairman emeritus Subhash Chandra on a plea by Indiabulls Housing Finance Ltd. following a loan default. 

Chandra stood as a personal guarantor for a loan given to a real estate developer Vivek Infracon Pvt., according to Indiabulls Housing’s lawyer Sumesh Dhawan. The insolvency plea came to court in 2022 after the 1.7 billion-rupee loan ($20.4 million) was declared in default but the case was stalled for nearly two years as the Supreme Court of India decided on the validity of personal insolvency laws.

”The copy of the order is awaited,” a spokesperson for Chandra said. “Appropriate steps will be actioned in accordance with the applicable law.” 

The setback for Chandra comes just months after Sony Group Corp. withdrew from a proposed merger between its India operations with Zee to create a media behemoth. In addition, Chandra and his son Punit Goenka face an investigation by India’s capital markets regulator on allegations of siphoning off Zee funds. 

With an aim to enhance profitability of the company following the failure of the merger deal, Zee’s Managing Director Goenka is seeking to restructure the organization by cutting 15% of its workforce. Zee also withdrew its litigation in India against Sony to force it to implement the merger.

Chandra founded Zee in 1992, a year after India’s economic liberalization. He stepped down from his position as the company’s chairman in 2019. Chandra was also a member of parliament in the upper house between 2016 and 2022. 

Initiation of insolvency means that there’ll be a moratorium on all legal proceedings against Chandra, and that he cannot sell or pledge his assets. The media baron can challenge the court’s insolvency order before an appellate tribunal.

--With assistance from P R Sanjai.

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