BYJU's $1.2Billion Debt: BYJU's in Trouble as Lenders Demand Repayment

The controversy originates from BYJU's claim that the loan's acceleration in March 2023 was unjustified. However, the lenders believe BYJU's is accountable for the entire sum. The matter is now being resolved through insolvency processes. The settlement of this issue will substantially impact BYJU's future and capacity to continue operations. US lenders represented by Glas Trust have refuted BYJU's founder Byju Raveendran's assertion that the company's verifiable debt is only around Rs 20 crore, stating that the struggling edtech firm will be required to repay the entire $1.2 billion Term Loan B, plus interest.

Byju Raveendran, the founder of Think and Learn (TLPL) and owner of the BYJU'S brand, stated approximately a week ago that the company's verified debt is just Rs 20 crore according to insolvency proceedings, and he may not be required to pay any money to the US lenders represented by Glas Trust.

Glas Trust has sued BYJU'S for recovering $1.2 billion TLB in both the United States and India

"Neither Byju nor the IRP have the jurisdiction to disqualify any term loan lender, and even if they did, BYJU's would still be required to repay the entire loan amount plus interest. Any other explanation is bogus, and Byju is aware of it," a statement from the steering committee of Byju's Alpha, Inc.'s ad hoc group of term loan lenders read. Glas Trust has sued BYJU'S for recovering $1.2 billion TLB in both the United States and India.

BYJU'S, previously the most valuable Indian edtech firm, suffered financial problems after US-based lenders filed a lawsuit against the company to recover $1.2 billion TLB.

Byju's has responded to the lenders' allegations

The lenders claim that BYJU's group entity, BYJU'S Alpha, secured a $1.2 billion Term Loan B from institutional investors and transported $500 million out of the United States in violation of loan agreement terms.

The lender's panel stated that almost all key personnel, including the CEO, CFO, and General Counsel, have abandoned BYJU, and a second auditor has resigned in less than two years due to BYJU's inability to explain the whereabouts of the $500 million, among other reasons.

BYJU's Raveendran continues to make misleading claims to the public

According to BYJU's lenders represented by Glas Trust, they incorrectly accelerated the loan in March 2023, which was supposed to be repaid in November 2026. The Insolvency Resolution Professional (IRP) has yet to admit Glas Trust's $1.35 billion debt claim against BYJU'S, which is still pending insolvency procedures. The lenders' panel stated that BYJU'S has no authority to disqualify any lenders. That power belongs solely to Timothy R Pohl, as the sole director and officer of BYJU's Alpha, Inc, as recognised by the Delaware court, and that Pohl has never excluded any lender. According to the lenders' panel, Raveendran continues to make misleading claims to the public to conceal the theft of more than $500 million and shift blame for his management failings at Think & Learn.

BYJU's Raveendran claims that Glas Trust represents lenders ineligible to recover dues

Conversely, Raveendran claims that Glas Trust represents lenders who are ineligible to recover dues. "Under the credit agreement, the borrower and the parent business TLPL can exclude lenders. Tim Pohl is only a nominee for the lenders. "He has no power to disqualify lenders, and his nomination cannot take away TLPL's contractual right to disqualify lenders," Byju stated.

BYJU's has borrowed $1.2 billion (plus interest)

The lenders' panel also refuted Raveendran's claim that Glas-represented lenders must prove they are not a distressed fund in New York court before proceeding with their demand, which will be difficult for them. "Whether any lender is a distressed fund" is not being tried in New York. Furthermore, the New York litigation is not a requirement for these proceedings," the panel stated. "The price of the TLB instrument has no bearing on the validity of Glas' claim or the amounts owed by BYJU." BYJU's has borrowed $1.2 billion (plus interest). It does not have to pay more if loan trading prices rise or less if they fall. This is a fundamental principle of how the financial markets operate," the panel stated.

The outcome of BYJU's loan repayment dispute could take numerous forms. One possible end is a negotiated settlement between BYJU's and the lenders. This could include partial loan repayment or debt restructuring. However, if a settlement is not reached, the case may evolve into a lengthy judicial struggle, with severe consequences for BYJU's. In the worst-case situation, BYJU's may have to restructure its operations or seek more financing to meet its financial obligations. We might just see another company shut down.

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