Foreign lenders, accounting for over 85% of Byju’s $1.2 billion term loan, have reportedly filed an insolvency petition against the prominent Indian edtech firm. According to sources familiar with the matter, the bankruptcy petition was lodged earlier this week at the Bengaluru bench of the National Company Law Tribunal (NCLT).
In response to the development, Byju’s issued a statement asserting that any proceedings before the NCLT by the lenders are premature and baseless. The company highlighted that the validity of the lenders’ actions, including the acceleration of the term loan, is currently under challenge in various proceedings, including before the New York Supreme Court. Byju’s also noted that the timing of the lenders’ proceedings aligns with the commencement of a rights issue by the company.
A prior agreement in July saw Byju’s and the steering committee of lenders amending the loan’s terms, including pricing and tenure, with a deadline set for August 3, 2023. The lenders, dissatisfied with the resolution, have engaged a leading law firm to pursue bankruptcy claims and have served notices to Byju’s. Queries sent to the lenders’ committee spokesperson remained unanswered.
The ongoing dispute between Byju’s and lenders revolves around the utilization of funds following the acquisition of the $1.2 billion term loan facility in November 2021. Term loan facilities are typically utilized to refinance existing debts or fund overseas acquisitions to enhance a company’s offerings.
Byju’s emphasized in its statement that the initiation of the legal process does not reflect on its financial strength or its ability to meet payment obligations. The company reaffirmed its resilience, viability, and commitment to sustainable growth amid the ongoing challenges.
