BYJU’S Faces $1.2 Billion Debt Challenge Amidst Legal Battles

BYJU’S, once India's most valued edtech company, is grappling with significant financial troubles, with lenders demanding repayment of its $1.2 billion Term Loan B (TLB). US-based creditors, represented by Glas Trust, have countered founder Byju Raveendran’s claims regarding the company’s debt obligations, insisting that BYJU’S must repay the full loan amount with interest, contradicting Raveendran's earlier statements.

Raveendran initially claimed that the company’s verified debt was only about Rs 20 crore, asserting that US lenders had no valid grounds to demand repayment of the entire $1.2 billion loan. However, Glas Trust, which represents a group of US lenders, has dismissed these claims. In their latest response, they stated that BYJU’S remains legally bound to repay the loan as per the terms of the credit agreement.

The controversy stems from a legal dispute that began when Glas Trust accelerated the loan’s repayment in March 2023, far ahead of its original due date of November 2026. BYJU’S argued that this acceleration was unjustified, sparking a heated exchange between the company and its lenders. According to the lenders, BYJU’S violated the loan agreement by moving $500 million of the loan amount out of the US, which they claim was a breach of the deal. Raveendran, on the other hand, has maintained that the company did not engage in any misconduct regarding the funds.

The lenders’ panel has also raised concerns about the internal management of BYJU’S. They pointed out that several key executives, including the CEO, CFO, and General Counsel, have resigned in recent months, citing difficulties in explaining the whereabouts of the $500 million in question. In addition, BYJU’S has seen its second auditor step down within two years, further complicating the company’s financial transparency.

BYJU’S counters these allegations, arguing that the insolvency proceedings in India have not recognized the $1.35 billion debt claim made by Glas Trust. Furthermore, the edtech giant insists that under the credit agreement, both the borrower and its parent company, Think and Learn Pvt Ltd (TLPL), have the right to disqualify lenders. Raveendran asserts that Timothy R. Pohl, the sole director of BYJU’S Alpha Inc., who was appointed as part of the Delaware court proceedings, does not have the power to override this contractual right.

This dispute has led to multiple lawsuits filed by Glas Trust in both the US and India, seeking repayment of the TLB. The lenders argue that BYJU’S is not in a position to challenge their claims, as the edtech company is legally obligated to honor the terms of the loan. They also dismissed Raveendran's assertion that the lenders would need to prove their status as a “distress fund” in a New York court before the repayment process could proceed.

While BYJU’S has faced criticism over its financial management, the edtech firm continues to fight back, denying accusations of fund mismanagement and asserting that the lenders have acted prematurely. Despite these legal battles, the lenders maintain that BYJU’S must fulfill its debt obligations, warning of serious consequences if the loan remains unpaid.
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