BENGALURU: The ad hoc group of term loan lenders of Byju’s Alpha Inc. on Wednesday said that certain holders of the term loans and GLAS Trust Company LLC have filed petitions pursuant to Chapter 11 of the US.
Bankruptcy Code to initiate involuntary Chapter 11 proceedings against Epic!, Neuron Fuel (DBA Tynker), and Tangible Play (DBA Osmo), the three US-based guarantors of the term loans in the US Bankruptcy Court.
In 2021, Byju’s Alpha, Inc. was established as a US subsidiary of the firm to receive proceeds of the term loans. The firm secured a $1.2 billion term loan in November 2021.
The edtech firm had acquired Epic in 2021.
In a statement, the lenders said, “Since Byju’s began to default on its term loan obligations shortly after we provided Byju’s Alpha with financing in 2021, we have made every effort possible to work productively and collaboratively to help Byju’s cure its multiple defaults.
However, it is clear that Byju’s management has no intention or ability to honour its obligations under the term loans.” It said Byju’s founders, who also serve as the three directors of the overall enterprise—Byju Raveendran, Riju Ravindran, and Divya Gokulnath—unlawfully diverted $533 million in loan proceeds.
“As a result of Byju’s failed leadership and mismanagement, significant harm has been done to Byju’s businesses and the value of the Company’s assets. Shareholders and lenders to the Company have seen the value of their investment deteriorate, employees and vendors have not been paid in a timely manner, and customers have suffered,” it said.
The lenders said this action was taken to protect and preserve the value of Epic!, Neuron Fuel, and Tangible Play. They have also invited former employees, students, and vendors of Epic!, Neuron Fuel, and Tangible Play to anonymously share their experiences. Earlier in January, lenders initiated corporate insolvency resolution proceedings against Think & Learn before the Bengaluru Bench of the National Company Law Tribunal.
