US lenders represented by Glas Trust have firmly countered BYJU’S founder Byju Raveendran’s recent claim regarding the company’s debt. The lenders assert that the beleaguered edtech firm is obligated to repay the entire $1.2 billion term loan B, along with accrued interest, despite Raveendran’s assertion that the verified debt is merely around Rs 20 crore.
The contention centers around a term loan B secured by BYJU’S Alpha, Inc., a group firm of BYJU’S. Raveendran had recently claimed that according to insolvency proceedings, the company’s verified debt was significantly lower than the amount demanded by the US lenders. He suggested that BYJU’S might not be required to pay the full amount.
However, the steering committee of the ad hoc group of term loan lenders to BYJU’S Alpha, Inc. refuted this claim, stating, “Neither Byju nor the IRP (insolvency resolution professional) have the authority to disqualify any term loan lender ‘and even if they did, BYJU’S would still be obligated to repay the full amount of the loan plus interest. Any argument otherwise is illegitimate, and Byju knows it.”
Glas Trust has initiated legal action in both the United States and India to recover the $1.2 billion loan. The financial troubles for BYJU’S, once the most-valued Indian edtech firm, began when US-based lenders filed lawsuits alleging that BYJU’S Alpha breached loan agreement norms by moving $500 million out of the US.
The lenders’ panel highlighted the severity of the situation, stating, “Almost all key personnel have abandoned BYJU’S, including the chief executive officer, chief financial officer, and the general counsel. We have now seen a second auditor resign in less than two years due to BYJU’S inability to explain away the whereabouts of the $500 million, among other reasons.”
BYJU’S contends that the lenders’ panel wrongly accelerated the loan repayment schedule. The company argues that the loan, which was originally set to be repaid by November 2026, was accelerated prematurely in March 2023. Moreover, the insolvency resolution professional has yet to admit the $1.35 billion debt claim made by Glas Trust during ongoing insolvency proceedings.
The lenders’ panel criticized Raveendran’s statements, asserting, “Raveendran continues to make false statements to the public in a desperate effort to conceal that he very likely orchestrated the theft of more than $500 million and shift the blame for his failures in managing Think & Learn.”
Raveendran, on his part, maintains that the Glas Trust-represented lenders are not eligible to recover the dues. He stated, “Under the credit agreement, not just the borrower but even the parent company TLPL has the right to disqualify lenders. Tim Pohl is simply a nominee of the lenders. He does not have any powers to disqualify lenders, nor can his nomination take away the contractual right that TLPL has to disqualify lenders.”
The lenders’ panel further challenged Raveendran’s claim regarding the necessity for Glas-represented lenders to prove they are not a distress fund in New York court. “Whether any lender is a ‘distressed fund’ is not on trial in New York. Additionally, the New York litigation is not a prerequisite to these proceedings,” the panel stated.
They concluded, “The price of the TLB (term loan B) instrument has no bearing upon the validity of Glas’ claim or the amounts owed by BYJU’S. BYJU’S borrowed $1.2 billion (plus interest). It does not need to pay more if loan trading prices go up, and it does not need to pay less if the loan trading prices go down. This is a basic tenet of how the finance markets work.”