SoftBank Group-backed Oyo Hotels and Rooms face a legal tussle with rival Zostel ahead of its up to $1.2 billion market debut over a deal between the two Indian hospitality startups that fell apart six years ago.

Oyo is looking to raise between $1 billion and $1.2 billion through a new share issue and an offer for sale from existing shareholders. The company is set to file draft initial public offering(IPO) documents in September.

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Their 2015 deal was for Oyo to buy some of Zostel’s businesses, while Zostel would get a 7 per cent stake in Oyo. The transaction fell apart, but the companies have been in a long-running legal battle over the terms, with Oyo arguing that they had not reached a definitive agreement.

In 2018, India’s Supreme Court-appointed an arbitrator on the case, who in March this year ruled that the terms of the deal were binding and Zostel was entitled to claim the 7 per cent stake in Oyo.