The financial crisis for Byju’s has further deepened as foreign investors of the ed-tech firm filed an insolvency petition against the company earlier this week before the National Company Law Tribunal (NCLT), reported Moneycontrol.
Byju’s, one of India’s most prominent online education platform, has further said that any proceedings by lenders before the NCLT in this matter are completely “baseless and premature”, reported Moneycontrol citing sources.
“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,” Byju’s said in an emailed response.
Byju’s January 25 response stated, “As we have stated before, 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.”
The foreign lenders who have advanced these proceedings earlier collectively extended over 85 percent of Byju’s $1.2 billion term loan. In July 2023, Byju’s had reached an agreement with the lenders to amend the loan terms, which included the pricing and tenure of the same.
Moneycontrol reported that the foreign lenders have hired a leading law firm in order to pursue the bankruptcy claims, with the notices already issued to Byju’s in this regard. This comes after lenders and Byju’s have been disputing over the use of funds for the edtech company.
Byju’s term loan woes
The online tutoring company secured the massive $1.2 billion term loan from the lenders in November 2021. Usually, a loan of this kind is utilised in refinancing the company’s debt or enhancing the company’s offerings.
Founder Byju Raveendran’s company, which was once valued at $22 billion, has since missed payments, leading to an escalated dispute with lenders. Raveendran attracted capital from some of the biggest investors in the tech world, including Mark Zuckerberg’s Chan Zuckerberg Initiative, Silver Lake Management and Naspers Ltd.
However, the education platform incurred losses after competition rose in the edtech space after the boom in the pandemic era.
(With inputs from Bloomberg)