SUMMARY
- US lenders maintain that BYJU’s owes $1.2 billion under TLB.
- Lawsuits are ongoing in both the US and India over the debt recovery.
- The lenders deny Raveendran’s claim of having authority to disqualify lenders.
US lenders, represented by Glas Trust, have firmly countered claims made by Byju Raveendran, founder of Think and Learn (TLPL) and owner of BYJU’S, regarding the company’s outstanding debt. Raveendran recently stated that BYJU’S has a verified debt of only Rs 20 crore as per insolvency proceedings, implying that he may not need to repay the $1.2 billion Term Loan B (TLB). However, the lenders argue that the edtech giant is fully obligated to repay the entire $1.2 billion along with interest.
In a statement issued by a steering committee representing an ad hoc group of TLB lenders, it was emphasized that neither Byju nor the Insolvency Resolution Professional (IRP) has the authority to disqualify lenders. The lenders maintain that BYJU’s remains bound to its loan commitments and any suggestion to the contrary is “illegitimate.”
BYJU’S financial troubles came to light when Glas Trust filed legal actions in both the US and India to recover the $1.2 billion TLB secured by BYJU’S Alpha, a subsidiary of the group. The lenders allege that BYJU’S violated loan agreements by transferring $500 million out of the US. The edtech firm has denied these allegations, maintaining that the acceleration of the loan by the lenders in March 2023 was wrongful, as the repayment deadline is November 2026.
Adding to the turmoil, many key executives, including the CEO, CFO, and General Counsel, have reportedly left the company, and two auditors have resigned in less than two years. The auditors’ exit was attributed to BYJU’S inability to clarify the whereabouts of the $500 million.
The lenders’ panel dismissed Raveendran’s claim that he can disqualify lenders under the credit agreement. They asserted that only Timothy R Pohl, as the sole director and officer of BYJU’S Alpha Inc. (as recognized by the Delaware court), has the authority in this matter. According to the lenders, Pohl has not disqualified any lenders.
In response, Raveendran maintains that TLPL, as the parent company, has the right to disqualify lenders, stating that Pohl is merely a nominee of the lenders without any authority to override this contractual right.
The lenders’ panel emphasized that the financial markets dictate that changes in loan trading prices do not affect BYJU’S repayment obligations. “Whether loan prices rise or fall, BYJU’S remains responsible for repaying the full $1.2 billion plus interest,” the statement added.
Despite the ongoing legal battle, Raveendran continues to claim that the Glas-represented lenders must prove they are not distress funds in the New York court before proceeding with their demand. The lenders argue that this point is irrelevant to the case.
