/dq/media/media_files/GGQNftfeoHvp4sQN5WD2.png?w=640&resize=640,335&ssl=1 "US Court Rules Against Byju’s Over Loan Default, But Company Maintains Legal Stand in India")
New Delhi: Byju’s, India’s EdTech giant, is under significant legal pressure following a decision by the Delaware Supreme Court. The court has ruled against Byju in a case filed by its US-based lenders, claiming that the company defaulted on a $1.2 billion loan. However, Byju has assured that this ruling will not impact its ongoing legal proceedings in India.
Background: The $1.2 Billion Loan Dispute
Byju’s had raised a $1.2 billion ‘Term Loan B’ (TLB) through its parent company Byju’s Alpha, backed by institutional investors in the US. However, Byju’s lenders, represented by Glass Trust, alleged that the company defaulted on the loan agreement and sought early repayment. The lenders took the matter to the Delaware Court of Chancery, which ruled in their favor. Byju’s appealed this decision, but the Delaware Supreme Court upheld the ruling, confirming the default.
What Did the Court Say?
The court’s decision has intensified the legal troubles for Byju. According to a statement from the ad hoc group of TLB lenders, Byju Raveendran, the CEO and founder, and his brother Riju Raveendran admitted that the company failed to meet the loan agreement terms by October 2022. The lenders have now escalated their claim from $1.35 billion to $1.5 billion amid ongoing bankruptcy proceedings in India.
The lenders expressed satisfaction with the court’s decision, stating, “We are pleased that the Delaware Supreme Court has confirmed that Byju’s knowingly violated the loan agreement.”
Byju’s Response: No Impact on Indian Legal Proceedings
Despite the setback in the US, Byju remains confident that the ruling will not interfere with its legal battles in India. In a statement, the company emphasized that the Delaware Supreme Court’s findings have no bearing on ongoing Indian legal proceedings. Byju continues to assert its right to disqualify certain lenders involved in distressed debt dealings.
The company’s statement added, “The disqualification of lenders holding more than 60% of the TLB remains in effect. No court has ruled otherwise.”
What’s Next for Byju’s?
Byju’s now faces a complex legal battle on multiple fronts. While the company reassures stakeholders that the US court’s decision won’t affect its Indian operations, the pressure from US lenders is mounting. The situation highlights the financial and legal challenges the EdTech company must navigate as it tries to resolve its debt crisis.
With lenders pushing for swift repayment and ongoing claims against the company, Byju’s legal troubles are far from over. The EdTech giant will have to continue addressing these issues while maintaining its business operations globally.
