Byju’s terms lenders’ insolvency proceedings against it as baseless

Bengaluru: Edtech major Byjus has called National Company Law Tribunal (NCLT) proceedings against it baseless as foreign lenders who are part of a $1.2 billion loan deal reportedly filed insolvency proceedings against the embattled firm after it failed to make pending payments.

“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,” a company spokesperson said.

The lenders filed the insolvency proceedings against Byju’s earlier this week, Bloomberg reported on Thursday.

The Bengaluru-based edtech unicorn, once India’s most valued, also alleged the lenders have timed the proceedings to coincide with a rights issue its parents company Think and Learn is planning. The parent is reportedly trying to raise $100-$200 million from existing investors at a valuation of $2 billion, a 90% dip from its peak of $22 billion.

Byju’s and its foreign lenders, which include Us-based investment management firms Redwood Investments and Silver Point Capital, have been battling since the startup raised $1.2 billion in debt through a loan by institutional investors in November 2021 to fund its overseas operations. The company failed to pay back a $40 million interest payment on June 5 last year and later sued Redwood in a New York city court for accelerating repayment and alleged predatory tactics.

This was after the lenders sued the company’s US subsidiary Byju’s Alpha, in Delaware court over accusations that it was hiding $533 million in an obscure hedge fund. Byju’s had refuted these claims, insisting that it had invested the funds in “high-grade fixed income assets.”

“Previously too, 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,” the company said in a statement on Thursday.

“In good faith and on a continuous basis, Byju’s 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 company has now stated as it looks for a “mutually beneficial and amicable resolution of matters.”

The company earlier this week reported its FY22 financials, according to which its net losses widened to Rs 8,245 crore compared to Rs 4,564 in the year prior. Its auditor noted that the company faces “material uncertainty" and doubts on its ability to continue as a going concern, partly due to the legal issues arising from this loan.