Channel Insider content and product recommendations are editorially independent. We may make money when you click on links to our partners. Learn More.

The high court in Mumbai has ordered managed services
platform provider Zenith Infotech to disclose the details of its recent sale of
Zenith RMM to Summit Partners, the Economic
Times of India reported
.

Zenith Infotech and the Trouble with Convertible Bonds

The order follows a lawsuit filed by QVT Financial in the
Bombay high court in late October in the midst of the Indian Diwali holiday
against Zenith Infotech and its subsidiaries, as well as Summit Partners. QVT
filed the suit after Zenith Infotech defaulted on $33 million in convertible
bonds. The default triggered a call for immediate repayment on other bonds,
leaving Zenith in default for $85 million.

The whole situation has left channel partners of Zenith
Infotech and Zenith RMM wondering what is going on, whether they should be
exploring alternative solutions to the Zenith Infotech offerings, and why the
company has not provided more information about the ongoing dispute.

Here’s a quick timeline of events around the situation:

Sept. 21: Zenith Infotech defaults on convertible bonds held
by QVT Financial

Sept. 26: Zenith Infotech spins off Zenith RMM, its remote
monitoring and management platform when private equity firm Summit Partners
acquires a majority stake in the spin off. (Zenith RMM CEO Michael George
confirmed to Channel Insider that Summit indeed now holds a majority stake and
Zenith Infotech holds a minority stake. But financial details of the deal or
the percentage stakes have not been disclosed.)

Sept. 28: Zenith Infotech announces the spin off of Zenith
RMM and the deal with Summit Partners.

Oct. 14: Zenith Infotech CEO Akash Saraf issues a written statement
to partners, vendors and customers saying that while reports of the bond
defaults are “factually correct [they] do not provide an accurate picture of
the company’s business and financial stability. Let me be clear: Zenith
Infotech is financially solvent, strong and stable. Our customer base for BDRs,
MirrorCloud and SmartStyle continues to grow tremendously.” Saraf says that
Zenith Infotech is negotiating with bond holders.

Oct. 26: QVT Financial files suit in Bombay High Court
against Zenith Infotech, its subsidiaries, and Summit Partners, seeking
disclosure of the details of the spin off deal of Zenith RMM.

Nov. 2: The court orders Zenith Infotech to disclose the
details of the Zenith RMM, Summit Partners deal.

Channel Insider has reached out to Zenith Infotech and
Zenith RMM, seeking details of the order and information about whether Zenith
Infotech intends to comply with it.