When the company’s online learning boom of the pandemic era fizzled out, lenders have been pressing hard for the USD 1.2 billion loan to be repaid
A Delaware judge stated that the lenders to Byju’s had legitimately cited a USD 1.2 billion loan default when seizing control of a division of the education technology provider, Bloomberg reported.
Delaware Chancery Court Judge Morgan Zurn decided that the lenders, which include Redwood Investments LLC and Silver Point Capital LP, were within their contractual rights to appoint their nominee to the board of Byju’s Alpha, a special-purpose company established for financing purposes, in place of a relative of the company founder, Byju Raveendran.
Zurn denied Byju’s claim that Timothy Pohl, chosen by lenders to manage the special-purpose company, lacked the right authorization to assume control. The judge stated in a 41-page decision that Pohl was “effectively seated” as the only director of Byju’s Alpha as a result of the defaults.
When the company’s online learning boom of the pandemic era fizzled out, lenders have been pressing hard for the USD 1.2 billion loan to be repaid. Government agents searched Byju’s offices this year while the company worked to sell assets and resolve the loan issue. Some investors have also sold their shares in one of the biggest ed-tech companies in the world as a result of the lender dispute.
Earlier this year, an attorney representing the lenders stated that Byju’s Alpha was meant to act as a holding company to safeguard their interests in the lawsuit. In a May court hearing, Brock Czeschin, an attorney representing Red Tree and Silver Lake, stated that the lenders had no intention of taking over the entire ed-tech business.
The lenders’ default arguments are unfounded. According to Zurn’s 2 November ruling, the loan terms permitted lenders to seize pledged Bjyu’s Alpha shares in the event of a default. An announcement of the judge’s decision in March revealed that the lenders had received a notice of default from a company unit when it was unable to secure the Indian government’s support as a loan guarantor.