US lenders, represented by Glas Trust, have strongly rejected claims made by Byju Raveendran, founder of Think and Learn (TLPL) and owner of BYJU’S, regarding the company’s debt obligations. Raveendran recently asserted that BYJU’S has a verified debt of only ₹20 crore as per insolvency proceedings, suggesting that he might be exempt from repaying the $1.2 billion Term Loan B (TLB). However, the lenders counter that BYJU’s is obligated to repay the full $1.2 billion along with accrued interest.
In a statement issued by a steering committee representing an ad hoc group of TLB lenders, it was emphasized that neither Byju Raveendran nor the Insolvency Resolution Professional (IRP) has the authority to disqualify lenders. The lenders assert that BYJU’s must meet its loan commitments and describe any contrary claims as “illegitimate.”
The dispute escalated when Glas Trust filed legal actions in both the US and India to recover the $1.2 billion TLB secured by BYJU’s Alpha, a subsidiary of the group. The lenders accuse Byju of breaching loan agreements by transferring $500 million out of the US. Byju denies these allegations, arguing that the acceleration of the loan by the lenders in March 2023 was wrongful since the repayment deadline is November 2026.
Adding to the company’s challenges, key executives, including the CEO, CFO, and General Counsel, have reportedly departed, and two auditors have resigned in less than two years. The auditors’ exit was linked to BYJU’s failure to account for the $500 million in question.
The lenders’ panel dismissed Raveendran’s claim that he can disqualify lenders under the credit agreement. They asserted that only Timothy R. Pohl, as the sole director and officer of BYJU’S Alpha Inc. (as recognized by the Delaware court), holds authority in this matter, and Pohl has not disqualified any lenders.
In response, Raveendran maintains that TLPL, as the parent company, has the contractual right to disqualify lenders, asserting that Pohl is merely a nominee of the lenders without the authority to override this right.
The lenders’ panel emphasized that fluctuations in loan trading prices do not alter BYJU’s repayment obligations. “Regardless of changes in loan prices, BYJU remains responsible for repaying the full $1.2 billion-plus interest,” the statement concluded.
Despite the ongoing legal dispute, Raveendran continues to argue that the Glas-represented lenders must demonstrate they are not distressed funds in the New York court before their demand can proceed. The lenders argue that this issue is irrelevant to the case.
Summary:
- US lenders, led by Glas Trust, reject Byju Raveendran’s claim that BYJU’S owes only ₹20 crore and insist on full repayment of the $1.2 billion Term Loan B.
- Legal actions have been filed by Glas Trust in the US and India to recover the loan, with allegations of loan agreement violations by BYJU’S.
- Key executives and auditors have left BYJU amid the financial dispute, and the lenders assert that changes in loan trading prices do not affect the company’s repayment obligations.