Business
Fresh setback for Byju’s; US court rules in favour of lenders, placing them in control of a unit – Times of India
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NEW DELHI: In a fresh setback for Byju’s, a US court has ruled in favour of the firm’s lenders stating, their move to remove Riju Raveendran (brother of Byju Raveendran) as the sole director and officer of Byju’s Alphaand replacing him with their representative Timothy R. Pohl is valid. The ruling issued on November 2 effectively places the lenders at the helm of Byju’s Alpha, the US-based subsidiary of Byju’s which was set up to receive the term loan B.“I conclude that Pohl is, indeed, Byju’s Alpha’s sole director and officer. GLAS (Glas Trust Company, the trustee representing lenders) and Pohl effectively seated Pohl as Byju’s Alpha’s director and officer. There is no dispute as to the mechanics of the removal of Byju’s Alpha’s former director and officer and Pohl’s appointment,” judge Morgan T. Zurn said in the ruling which was reviewed by TOI.
Byju’s declined to comment.
The court cited instances of default by Byju’s to arrive at the conclusion. “The WhiteHat guarantee default gives rise to an event of default. It is undisputed that WhiteHat, to date, has not acceded as a guarantor,” the court ruled. As part of the terms of the loan, Byju’s subsidiary WhiteHat Jr. had to stand as a guarantor for the loan. The court also said that Byju’s has yet not been able to provide audited annual financial statements for FY22. “Plaintiffs argue that the WhiteHat guarantee default and the reporting defaults comprise four separate events of default under the credit agreement, as amended. They contend that the events of default entitled GLAS to exercise contractual remedies pursuant to the underlying agreements, such that all of the actions they took were valid,” the court filings showed. In March, the lenders filed a notice of default.
The development marks a fresh turn in the ongoing dispute between Byju’s and its lenders over the repayment of the $1.2 billion term loan B that the startup had raised in 2021 to fund its overseas expansion. Last week, Byju’s filed its FY22 results only for its core business after more than a year’s delay, revealing Rs 2,253 crore in EBITDA losses.
Valued at $22 billion at its peak and chased by high profile investors who collectively infused more than $5 billion into the Bengaluru-based startup since inception, Byju’s is currently in the process of selling its assets like Epic to repay its term loan. In a valuation markdown by its investor Prosus earlier this year, Byju’s was valued at $5.1 billion.
Byju’s declined to comment.
The court cited instances of default by Byju’s to arrive at the conclusion. “The WhiteHat guarantee default gives rise to an event of default. It is undisputed that WhiteHat, to date, has not acceded as a guarantor,” the court ruled. As part of the terms of the loan, Byju’s subsidiary WhiteHat Jr. had to stand as a guarantor for the loan. The court also said that Byju’s has yet not been able to provide audited annual financial statements for FY22. “Plaintiffs argue that the WhiteHat guarantee default and the reporting defaults comprise four separate events of default under the credit agreement, as amended. They contend that the events of default entitled GLAS to exercise contractual remedies pursuant to the underlying agreements, such that all of the actions they took were valid,” the court filings showed. In March, the lenders filed a notice of default.
The development marks a fresh turn in the ongoing dispute between Byju’s and its lenders over the repayment of the $1.2 billion term loan B that the startup had raised in 2021 to fund its overseas expansion. Last week, Byju’s filed its FY22 results only for its core business after more than a year’s delay, revealing Rs 2,253 crore in EBITDA losses.
Valued at $22 billion at its peak and chased by high profile investors who collectively infused more than $5 billion into the Bengaluru-based startup since inception, Byju’s is currently in the process of selling its assets like Epic to repay its term loan. In a valuation markdown by its investor Prosus earlier this year, Byju’s was valued at $5.1 billion.
