BYJU'S defaulted on $1.5 billion loan, rules US court
The Supreme Court of Delaware, US, has ruled that Indian edtech giant BYJU'S failed to repay a $1.5 billion loan. This verdict was delivered yesterday, and allows lenders to seize control of BYJU'S assets in the US, primarily BYJU Alpha Inc, and demand full repayment. The lenders have appointed Timothy Pohl as the sole director of BYJU Alpha Inc for this purpose.
Lenders express satisfaction over court's decision
The lenders expressed their satisfaction with the court's decision, stating, "We are gratified that the Delaware Supreme Court decisively affirmed what we have known all along: BYJU'S breached and defaulted on the credit agreement it knowingly and willingly entered into." They further emphasized that this ruling confirms BYJU'S default, which was personally acknowledged by BYJU Raveendran and his younger brother Riju, when they signed multiple amendments to the credit agreement between October 2022 and January 2023.
Lenders accuse BYJU'S of creating alternate narrative
The lenders accused BYJU'S of attempting to create an alternate narrative that it did not default and trying to shift the blame for the company's failure onto others. They demanded transparency about the $533 million of missing loan proceeds. The Delaware Supreme Court ruled that amendments to the credit agreement between October 2022 and January 2023, clearly indicate BYJU'S voluntarily admitted both that events of default occurred and their consequences, namely GLAS Trust LLC's legal entitlement to exercise remedies.
Court upholds earlier ruling on BYJU'S default
The Delaware SC upheld a previous ruling that found BYJU'S in default on its $1.2 billion Term Loan B, allowing lenders to take control of BYJU Alpha Inc. In March 2023, the lender issued a notice of default to BYJU'S after it failed to renegotiate loan terms. Despite an appeal from BYJU'S for case dismissal due to a separate lawsuit pending in New York, the SC rejected this claim stating that BYJU'S had forfeited its right.
Lenders retain control of BYJU'S Alpha Inc
Following the Delaware SC ruling, control of BYJU Alpha Inc remains with GLAS Trust and its client lenders. The court noted that BYJU'S had ample chances to address its concerns before the Court of Chancery but failed to do so. It emphasized that it cannot consider new arguments introduced for the first time on appeal unless justice requires it, which was not the case here.
