Byju's Faces Lawsuit In US; Edtech Major Clarifies Payments Made Fully Compliant With Credit Agreement The lawsuit has been filed as Glas Trust Company vs Riju Ravindran, 2023-0488, Delaware Chancery Court (Wilmington)
Opinions expressed by Entrepreneur contributors are their own.
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.
Tech company Byju's Alpha, was sued by an agent for lenders owed $1.2 billion after months of negotiations between creditors and the education technology firm, according to a Bloomberg report. The suit was lodged by Glas Trust Company and investor Timothy R. Pohl, naming BYJU'S Alpha, Tangible Play, Inc., and Riju Ravindran as defendants. Ravindran is the director of Alpha Inc, the report noted. The lawsuit has been filed as Glas Trust Company vs Riju Ravindran, 2023-0488, Delaware Chancery Court (Wilmington).
Riju Ravindran is a director of Think and Learn Private Limited, according to a regulatory filing. Tangible Play Inc., is the business behind the Osmo brand. In 2019, the Byju's bought US-based educational gaming company Osmo for $120 million in a stock-and-cash deal.
According to the news report, Details about why the case was filed and what Glas Trust and Pohl want have been redacted from court documents. One filing indicates that the lawsuit may be related to a fight over the election of directors, but does not include any specific allegations.
Moreover, a telephonic hearing was slated for Thursday by a judge in Wilmington, Delaware, to ascertain if the lawsuit needs expedited proceedings. Notably, Delaware Chancery Court Judge Morgan Zurn rejected the request by Byju's and Ravindran to keep the hearing's content confidential. Judge Zurn, in a public filing, underlined the necessity of court transparency.
As a clarification to all these legal procedures, Byju Raveendran said that, "The transfers made by the company were 'in full compliance' with and did not contravene any terms of the parties' Credit Agreement and the agreed-upon rights and responsibilities. In fact, even lenders have not alleged that the transfer was not permitted under parties' existing contractual arrangement. As BYJU'S alpha is a non-operative entity, the funds were transferred to other operative entities for growth and expansion in its global operations. BYJU'S entered into the Term Loan B agreement with the clear intention of utilizing the raised funds to drive growth and expansion in its global operations and is free to transfer and use the funds as necessary."
Additionally, BYJU'S has also claimed that the company has fulfilled all its contractual payment obligations as agreed upon in the Term Loan B signed in 2021 and has not missed a single payment thereunder. There have been no monetary defaults under the loan. The lenders' allegations (which also we dispute) concern merely insignificant technical and non-monetary defaults.
"The order does not have any bearing on any other subsidiary of BYJU'S anywhere in the world. Further, this is a temporary order and the Court has not made any final determination against Byju's Alpha, including in relation to the transfer. In the face of unrealistic and unacceptable terms being demanded by a collective of lenders engaged primarily in opportunistic trades, we remain steadfast in our pursuit of a fair and equitable resolution through good-faith negotiations. Our unwavering commitment to meeting all our financial obligations is demonstrated by our impeccable track record of consistently honouring timely payments," added Byju's.
The edtech firm, whose premises were also searched by the Enforcement Directorate (ED) last month, has said that, "The successful completion of a recent funding round of $250 million further reinforces our financial stability and serves as a testament to the unwavering confidence that investors have in our business. We will continue to assertively negotiate with our lenders to secure a resolution that not only ensures the long-term sustainability of our international operations but also aligns with our unwavering mission of providing quality education globally."