Byju's insolvency resolution professional (IRP) has removed Glas Trust Co, a consortium of the troubled edtech start-up's US-based lenders, from the committee of creditors.
As per Economic Times, Byju's IRP Pankaj Srivastava reportedly took the step after concluding that Glas Trust did not represent 51% of the lenders, who provided $1.2 billion term loan B (TLB) to Byju's.
The development came after the first meeting of the creditors' committee on Tuesday.
Glas Trust had recently moved the Bengaluru bench of the National Company Law Tribunal (NCLT) seeking Srivastava's removal as the IRP.
The lenders in an application filed with the tribunal on August 30 questioned Srivastava's ouster stating that the IRP failed to comply with current bankruptcy rules, which state that the first meeting of the committee shall be held within seven days of the constitution of the CoC.
Advertisement
Meanwhile, a spokesperson for the steering committee of the TLB lenders told ET, “Mr Pankaj Srivastava’s actions are unprecedented and entirely illegitimate as no interim resolution professional in the history of the Insolvency and Bankruptcy Code of India has ever attempted to unlawfully strip financial creditors of claims of this magnitude amounting to more than $1.35 Bn without any legitimate reason and in doing so securing his appointment as the permanent resolution professional.”
It is also reported that Byju has disqualified most of the lenders represented by Glas Trust, citing tech major's right under the credit agreement to exclude "predatory lenders focussed on distressed debt".
Advertisement
The matter will reportedly be heard on Wednesday (September 4).
A person privy to the development reportedly said that Glas Trust no longer meets the required threshold to pursue its claims against Byju due to lender disqualifications.
To recap, Byju's raised a $1.2 billion Term B loan in 2021. As they faced a funding winter, they were unable to pay back the loans, which led to a lawsuit against the company.
Recently the Supreme Court quashed NCLAT's approval of Byju's settlement with BCCI over sponsorship dues of Rs 158 crore with respect to the company's insolvency proceedings.
