In a significant development, Byju’s Alpha, a wing of the eminent technology firm Byju’s, has been slapped with a lawsuit by an agent representing lenders who claim an outstanding debt of $1.2 billion. As per a Bloomberg report, this legal action follows prolonged negotiations between the edtech company and its creditors.
Glas Trust Company, along with investor Timothy R. Pohl, have lodged the suit. The defendants listed include BYJU’S Alpha, Tangible Play, Inc., and Riju Ravindran. Ravindran serves as a director at Alpha Inc.
Ravindran also holds the directorial position at Think and Learn Private Limited, as stated in a regulatory filing. Tangible Play Inc., the company behind the Osmo brand, was acquired by Byju’s in 2019. The edtech firm purchased the US-based educational gaming company Osmo in a $120 million stock-and-cash transaction.
Details of the lawsuit, including the reasons for filing it and what Glas Trust and Pohl seek to gain, have been redacted from the court documents. Some filings suggest that the lawsuit might be tied to a dispute over the election of directors, but no specific allegations have been made.
A telephonic hearing has been arranged by a judge in Wilmington, Delaware, to decide whether the lawsuit requires expedited proceedings. The request by Byju’s and Ravindran to keep the hearing’s content confidential was denied by Delaware Chancery Court Judge Morgan Zurn. In a public filing, Judge Zurn emphasized the importance of court transparency.
Addressing the legal proceedings, Byju Raveendran confirmed that the company’s transfers were ‘in full compliance’ with the terms of the parties’ Credit Agreement and did not violate any agreed-upon rights and responsibilities. He stated that the funds were shifted to other operational entities for global growth and expansion since BYJU’S Alpha is a non-operative entity. He also affirmed that the company had fulfilled all its contractual payment obligations as per the Term Loan B signed in 2021, without any monetary defaults.
Byju’s maintains that the temporary order does not affect any of its other subsidiaries worldwide. Amid unrealistic terms demanded by a group of lenders, the company asserts its dedication to fair and equitable resolution through good-faith negotiations. Furthermore, Byju’s takes pride in its unblemished record of timely payments, demonstrating their unwavering commitment to meeting financial obligations.
The edtech firm, which had its premises searched by the Enforcement Directorate (ED) last month, assures that the successful completion of a recent $250 million funding round strengthens its financial stability. Byju’s asserts it will continue to negotiate aggressively with its lenders to secure a resolution that guarantees the sustainability of its international operations and aligns with its mission to provide quality education globally.