Edited by Deepali Verma
Trouble is growing for Byju’s as the company faced a setback with two more insolvency petitions being filed against it. Foreign lenders have in total extended over 85% of the $1.2 billion term loan B (TLB), filed an insolvency petition against the firm in the National Company Law tribunal earlier this week.
Meanwhile, France-based Teleperformance Business Services also filed a similar plea in the tribunal for recovery of its dues on January 25. The petition of the foreign lenders is yet to be taken on record by the Bengaluru bench of the NCLT, Teleperformance’s plea has been registered. Petition by the foreign lenders falls in the category of financial creditors but Teleperformance being a vendor will fall in the category of operational creditor.
Another insolvency petition against the edtech firm came from BCCI, which is being heard in the NCLT.
Upon contact with respect to the foreign lenders move to NCLT against the firm, a Byju’s spokesperson remarked that the move is premature and baseless. “The validity of lenders’ actions, involving the acceleration of the term loan, is pending and under challenge in several proceedings, including before the New York Supreme Court. Therefore, any proceedings before NCLT are premature and baseless,” said the spokesperson.
Further, the company is of a belief that the timing of the lenders’ is conspicuous as it coincides with the start of a rights issue by the parent company of Byju’s. Byju’s, in July, was close to an agreement with the steering committee of the lenders to amend the loan’s terms, such as the pricing and tenure, by August 3, 2023.
Byju’s and the lenders have found themselves in the middle of a protracted dispute over the use of funds. The disagreements started arising soon after the edtech firm secured the $1.2 billion term loan facility (TLB) from the lenders in November 2021. A TLB is defined as a senior secured syndicated credit facility issued by global institutional investors. The proceeds from a TLB are used to either refinance an existing debt or make overseas acquisitions to enhance a company’s offerings.
Additionally, Byju’s remarked that the start of the legal process is not a reflection of its financial strength or its ability to meet payment obligations. “We firmly maintain that we are a resilient, viable entity that is continuously charting a path towards sustainable growth,” the spokesperson said.
Byju’s, informed in September that it had invested the money raised through TLB in high-grade fixed income assets, countering allegations of concealing the money from lenders by putting it in an obscure hedge fund.
Byju’s said that the lender’s acceleration and consequent actions appear to be based, in part, on the failure of Whitehat Education Technology, a wholly-owned subsidiary of Think & Learn, to guarantee the term loan. The spokesperson pointed out that the lenders previously have made unsuccessful attempts to interfere with Byju’s rights to deal with capital provided under the loan agreement.
The company informed that the Delaware court has in addition refused to interfere with the Byju’s rights to disqualify distressed asset fund lenders under the loan agreement – who continue to take these steps in an attempt to get Byju’s to succumb to their extortionate demands.
