Majority of lenders who were part of USD 1.2 billion Term Loan B (TLB) secured by BYJU’S have filed an insolvency petition with NCLT Bangalore against the company, according to people aware of the development.
The company said the acceleration and consequent actions by the lenders appear to be based, in part, on the failure of Whitehat Education Technology Pvt Ltd, a wholly owned subsidiary of Think & Learn, to guarantee the term loan
Majority of lenders who were part of USD 1.2 billion Term Loan B (TLB) secured by BYJU’S have filed an insolvency petition with NCLT Bangalore against the company, according to people aware of the development.
While the filing has not been made public yet, BYJU'S has termed the claims as "premature and baseless'.
The case has been filed through Glas Trust Company, which represents over 80 per cent of lenders that were part of the TLB loan – which is granted by institutional lenders instead of banks.
The development comes when BYJU'S has claimed to be negotiating with the TLB lenders to settle the entire debt by raising funds from the sale of a couple of subsidiaries.
The matter is also sub-judice before Delaware appellate courts.
On the petition, a BYJU'S spokesperson said, "As we have stated before, the validity of lenders' actions, including acceleration of the term loan, is pending and under challenge in several proceedings, including before the New York Supreme Court. Hence, any proceedings by lenders before NCLT are premature and baseless."
The company said the acceleration and consequent actions by the lenders appear to be based, in part, on the failure of Whitehat Education Technology Pvt Ltd, a wholly owned subsidiary of Think & Learn, to guarantee the term loan.
"This is despite the fact that provision of such guarantee would contravene extant RBI regulations. In fact, proceedings are on foot before the Delaware appellate courts on this very issue," the spokesperson said.
BYJU'S took the Term Loan B in 2021 when interest rates were low. However, the lenders contested transferring USD 500 million from BYJU'S US-based subsidiary BYJU'S Alpha to other entities in a Delaware court.
The edtech major has also approached New York Supreme Court to challenge lenders' demand to immediately pay USD 1.2 billion and disqualify one of the lenders, Redwood.
BYJU'S said that the lenders have made unsuccessful attempts to interfere with BYJU'S rights to deal with capital provided under the loan agreement.
"The Delaware Chancery Court has rightfully refused to let the lenders do so, and lenders’ subsequent attempts on this front have been unsuccessful. Incidentally, the Delaware court has also refused to interfere with BYJU’S rights to disqualify distressed asset fund lenders under the loan agreement - who continue to take these steps in an attempt to get BYJU’s to succumb to their extortionate demands," BYJU'S said.
The edtech firm said that it has been in regular touch with
The lenders and has also involved them in the sales process of some of its prized US subsidiaries to settle matters.
"The timing of these proceedings is also conspicuous as it coincides with the commencement of a rights issue by the parent company of BYJU’S. The initiation of this legal process does not reflect the true financial standing of our company, nor does it accurately represent our ability to meet our obligations. We firmly maintain that we are a resilient, viable entity that is incrementally charting a path towards sustainable growth," the BYJU'S spokesperson said
The spokesperson said that BYJU's remains committed to a constructive dialogue with the lenders.
Besides TLB lenders, operational creditor, Teleperformance Business Services India Ltd (TBSIL), has also approached NCLT Bangalore against Think and Learn. An email query sent to Glas Trust Company did not elicit any reply.