Edtech giant Byju’s is encountering further challenges with two additional insolvency petitions filed against the company. Foreign lenders, who collectively provided over 85% of the $1.2 billion term loan B (TLB), lodged an insolvency petition earlier this week, while France-based Teleperformance Business Services also filed a similar plea for the recovery of its dues on Thursday.
Categorization of Creditors: The foreign lenders’ petition falls under the category of financial creditors, while Teleperformance, being a vendor, falls into the operational creditor category. This adds to the ongoing insolvency petition filed by the Board of Control for Cricket in India (BCCI) against Byju’s, currently being heard in the National Company Law Tribunal (NCLT).
Company’s Response: In response to the latest developments, a spokesperson from Byju’s dismissed the move as premature and baseless. The company emphasized that the validity of the lenders’ actions, including the acceleration of the term loan, is still under challenge in various proceedings, including before the New York Supreme Court.
Timing and Disputes: Byju’s raised concerns about the timing of the lenders’ actions, noting that it coincides with the commencement of a rights issue by Byju’s parent company. Disputes between Byju’s and the lenders have been ongoing, primarily related to the utilization of funds following the $1.2 billion term loan facility secured in November 2021.
Financial Strength and Legal Process: Byju’s reassured that the initiation of the legal process does not reflect negatively on its financial strength or its ability to meet payment obligations. The company firmly maintained that it is a resilient and viable entity committed to sustainable growth.
Background on Fund Utilization: In September, Byju’s clarified that it invested the funds raised through TLB in high-grade fixed income assets, countering allegations of concealing the money by placing it in an obscure hedge fund. The company attributed the lenders’ actions to the failure of its subsidiary, Whitehat Education Technology, to guarantee the term loan, citing regulatory constraints.
Ongoing Legal Proceedings: Byju’s highlighted ongoing proceedings in Delaware appellate courts regarding the guarantee issue. The spokesperson mentioned unsuccessful attempts by lenders to interfere with Byju’s rights to deal with capital provided under the loan agreement. Byju’s stated its commitment to constructive dialogue for a mutually beneficial resolution with the lenders.
In conclusion, Byju’s remains embroiled in legal battles and disputes with creditors, signaling a challenging period for the prominent edtech firm.
Comments