BYJU’s: Banks have filed insolvency petition against BYJU’s for recovery of $1.2 billion term loan

A group of foreign lenders, who provided more than 85 percent of Byju’s $1.2 billion term loan, have submitted an insolvency petition against the Indian online tutoring platform. This legal move took place earlier in the week at the Bengaluru bench of the National Company Law Tribunal (NCLT), according to undisclosed sources.
Byju’s Response to Insolvency Petition
Byju’s, in response to the insolvency petition, has labeled any actions taken by the lenders before the NCLT as premature and without basis. The edtech company stated that the validity of the lenders’ actions is under challenge in various proceedings, including before the New York Supreme Court. Byju’s also pointed out that the timing of the lenders’ actions coincides with the launch of a rights issue by the company.
Background of Lender-Byju’s Dispute
The dispute between Byju’s and the lenders originated after Byju’s secured a $1.2 billion term loan facility in November 2021. This disagreement involves the use of funds and has led to a protracted legal battle.
Amendments to Loan Terms and Current Legal Status
In July, Byju’s reached an agreement with the steering committee of lenders to modify the loan’s terms by August 3, 2023. However, the lenders, now represented by a leading law firm, have initiated bankruptcy claims against Byju’s. Byju’s emphasized that this legal process doesn’t reflect its financial strength or its ability to meet payment obligations.
Byju’s Investment of TLB Funds and Legal Actions
Byju’s, in September, clarified that the funds raised through the term loan facility were invested in high-grade fixed income assets. This move was in response to allegations of concealing funds in an “obscure hedge fund.” Byju’s highlighted that its Credit Agreement with the lenders does not restrict the usage or movement of funds. The company also denied reports suggesting it was no longer the beneficial owner of the funds and initiated legal action in the New York Supreme Court, accusing lenders of predatory tactics.