The lenders have been in negotiation with the company over prepayment of a $1.2 billion term loan taken by its US subsidiary, Byju’s Alpha, even as the two sides also continued to fight a legal battle in US courts.
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They filed the insolvency application against Think & Learn Pvt Ltd, Byju’s parent company, before the Bengaluru bench of the National Company Law Tribunal earlier this week. They claimed that the company had defaulted on loan payment.
It wasn’t immediately known whether the NCLT, the dedicated bankruptcy court, had taken up the case.
“This action was taken following over 16 months of good faith efforts on behalf of the ad hoc group to restructure the term loans, which, if successful, would have immediately solved for the loan’s numerous outstanding defaults, acceleration, and ended all open litigation while avoiding further enforcement actions,” the lender group said in a news release Thursday.
This group of lenders claims to collectively own more than 85% of the $1.2 billion term loan.
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Byju’s in a media statement said the lenders’ move was premature and the allegations were baseless.“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,” a spokesperson for the firm said. The “validity of lenders’ actions including acceleration of the term loan (repayment) is pending and under challenge in several proceedings”, the company said.
The lender group, meanwhile, said they believed that Byju’s management has no intention or ability of honouring its obligations under the term loans. “That said, we are hopeful that India’s corporate insolvency resolution process will help stabilise Think & Learn and result in implementing a resolution plan that accounts for the interests of all stakeholders.”
The loan that Byju’s had initially agreed to pay via quarterly instalments of $30 million starting June 2022 has been a longstanding issue for the firm.
The company halted payments in July 2023 and is currently engaged in a legal wrangle with the creditors in the US. The same month, a statement from the lenders said they had reached an agreement with Byju’s to amend the terms of the loan. There had been no update on the matter since.
In April 2023, ET reported that the lenders had sought up to $200 million in prepayment and that the company was offering a higher rate of interest on the loan to lenders as part of the new agreement. The amendment in loan terms was triggered by Byju’s delay in furnishing audited financials for fiscal 2021 and 2022.
Recent troubles
After several delays and multiple missed deadlines, Byju’s parent firm filed its audited FY22 financials this week with the Registrar of Companies. It is also scouting for funds, and may have to take a massive hit on its valuation to as low as $500 million. In 2021, it was valued at $22 billion.
Also read | From $22 billion to $1 billion: Byju’s valuation at BlackRock bottom
Byju’s reported an operating revenue of Rs 5,014 crore in FY22 on a loss of Rs 8,245 crore.
ET reported on January 25 that Manipal Group chief Ranjan Pai picked up a 40% stake in Byju’s-owned Aakash by converting his $300 million investment in the company.
BlackRock, the world’s largest asset manager and an investor in Byju’s, reduced the implied valuation of the edtech firm to about $1 billion. The firm has been embroiled in news ranging from corporate governance concerns, incessant layoffs and board resignations among a range of serious concerns over the past year and a half.