BYJU’S, a top Indian edtech company, is in a major financial dispute with US lenders. The issue started when these lenders sued to recover a $1.2 billion loan.
Byju Raveendran’s Claims
Byju Raveendran, founder of Think and Learn and owner of BYJU’S, recently stated the company’s verified debt is only Rs 20 crore. This was revealed during insolvency proceedings. He suggested that he might not need to repay the full amount to US lenders represented by Glas Trust.
Lenders’ Counterclaim
The US lenders, represented by Glas Trust, have challenged Raveendran’s assertion. They argue that BYJU’S is obligated to repay the entire USD 1.2 billion TLB along with accrued interest. The lenders’ panel has accused Raveendran and the Insolvency Resolution Professional (IRP) of lacking the authority to disqualify any term loan lender. They emphasize that the full loan amount must be repaid despite any claims to the contrary.
Legal Proceedings
Glas Trust has filed lawsuits in both the US and India seeking to recover the USD 1.2 billion. The lenders allege that BYJU’S Alpha, a group firm, moved USD 500 million out of the US in breach of the loan agreement. BYJU’S disputes these allegations and maintains that the lenders’ attempt to accelerate the loan repayment in March 2023, which was due in November 2026, was unjustified.
Personnel Issues and Auditor Resignations
The lenders’ panel noted that key personnel, including the CEO, CFO, and General Counsel, have left BYJU’S. They also cited the resignation of a second auditor in less than two years due to BYJU’S failure to account for USD 500 million.
BYJU’S Defense
BYJU’S argues that Glas Trust’s lenders wrongly accelerated the loan. It also claims the IRP hasn’t accepted the $1.35 billion debt. Raveendran asserts that TLPL can reject lenders. He believes Timothy R. Pohl, the only director of BYJU’S Alpha, Inc., shouldn’t undermine this right. The Delaware court recognizes Pohl in this role.
Ongoing Dispute
The lenders’ panel has denied Raveendran’s claims. They say he must prove they are not a distressed fund in New York court. Moreover, they argue that Glas Trust’s claim and BYJU’S debts are not tied to loan prices. BYJU’S must repay USD 1.2 billion plus interest, regardless of loan value changes.
Conclusion
The dispute between BYJU’S and its US lenders is a complex legal battle with high financial stakes. As both sides argue, the outcome will significantly impact the company’s future and its debts.
