Tree House parents in quandary as Zee Learn calls off merger plan

Crippled pre-school chain Tree House on Friday landed in further trouble with Essel Group’s education arm Zee Learn not only calling off its proposed merger, citing the bad press, but also threatening to take legal recourse to seek damages from the failed deal.

“Our board announced on Friday that in the light of the recent inordinate developments at Tree House, it is withdrawing from the proposed merger process, which has been awaiting various court, shareholder and related statutory approvals,” Zee Learn said in a statement.

The company further warned it will seek compensation for the loss of brand image, saying “We reserve our right to initiate further suitable action against Tree House and its promoters for the loss of our reputation and goodwill and damages.” 

Tree House could not be reached for comments immediately. Various media reports said the city-based pre-school chain promoted by Rajiv Bhatia has closed down over 110 centres across the country, leaving the future of the tens of thousands of children in the lurch.

 The shuttering follows alleged non-payment of salaries to teachers for months due to deep fund crunch.

Out of the closed branches, over 35 are in Mumbai alone and a group of harried parents have filed a case against the school management at Charkop police station in the city.

Zee Learn said the board took cognisance of the recent adverse media reports about Tree House closing down hundreds of its playschools abruptly leaving parents and students high and dry and of many parents filing police complaints against Tree House and its promoters.

“The board feels that this may change the complete business dynamics of Tree House and is not in the spirit of the scheme of amalgamation signed between the two,” Zee Learn said.  

This fact, coupled with the steadily deteriorating financials of Tree House, allegations of irregularities by its promoters and the need to protect the interest of Zee Learn shareholders, led the board to withdraw from the merger process, it said.