Lenders To Byju’s American Subsidiary Drag More Entities To Court
NEW YORK, NY (IANS) – A group of lenders on June 5 petitioned against new entities, tied to embattled ed-tech company Byju’s US subsidiary, into bankruptcy in a US court, alleging that these entities are not paying their debts.
The group of lenders, which gave Byju’s Alpha $1.4 billion term loan, petitioned against Neuron Fuel Inc., Epic! Creations Inc. and Tangible Play Inc. to Chapter 11 of the US Bankruptcy Code to initiate involuntary proceedings against them, in the Delaware court.
The lenders said in a statement that since Byju’s began to default (on $1.2 billion of debt) on its term-loan obligations, “we have made every effort possible to work productively and collaboratively to help Byju’s cure its multiple defaults”.
“However, it is clear that Byju’s management has no intention or ability to honor its obligations under the Term Loans. Indeed, BYJU’s founders, who also serve as the three directors of the overall enterprise – Byju Raveendran, Riju Ravindran, and Divya Gokulnath – unlawfully diverted $533 million in loan proceeds, the whereabouts of which are still unknown,” the creditors alleged.
The ed-tech company had earlier claimed that no funds have been siphoned off and around $533 million are “currently in a 100 percent non-US subsidiary of the company”.
The lenders further said that because of Byju’s failed leadership and mismanagement, significant harm has been done to the company’s businesses and the value of the company’s assets.
“Shareholders and lenders to the company have seen the value of their investment deteriorate, employees and vendors have not been paid in a timely manner, and customers have suffered,” the lenders said.
Once valued at $22 billion, the ed-tech company’s valuation has plummeted around 95 percent after investors cut their stakes in several rounds.
In 2021, Byju’s Alpha was established as a US subsidiary to receive proceeds of the Term Loans.
In February 2024, Byju’s Alpha had filed for Chapter 11 bankruptcy protection in the US.
