Byju’s Defaults $40mn Loan, Sues TLB Lenders


Byju’s, an edtech major, has filed a complaint in the New York Supreme Court to challenge the acceleration of the USD 1.2 billion Term Loan B (TLB) and to disqualify Redwood, who, contrary to the terms of TLB, purchased a significant portion of the loan while primarily trading in distressed debt. According to the company, it has had to take these measures following a series of predatory tactics by the lenders, led by Redwood.

The company said that, on March 3, 2023, the TLB lenders unlawfully accelerated the TLB on account of certain alleged non-monetary and technical defaults. On the back of this unconscionable acceleration of the TLB, the TLB lenders undertook unwarranted enforcement measures, including seizing control of Byju’s Alpha and appointing its own management.

However, questioning the credibility of the allegation, the TLB lenders (through their agent, GLAS Trust Company) filed a lawsuit in Delaware.

The edtech platform alleged that the TLB lenders attempted to deprive it of its contractual right to ‘disqualify’ lenders engaged principally in opportunistic trading in the Delaware proceedings.

However, this attempt was rejected by the Delaware court, which ruled that the TLB lenders “have not demonstrated either irreparable harm or the balance of the harms as required to support a provision restraining” BYJU’s contractual right.

According to the company, lenders issued a notice demanding immediate payment of the entire amount under the TLB, despite knowing that this purported acceleration was under challenge before the court.Byju’s alleged that the TLB lenders’ agent has even refused to provide the identities of the TLB lenders to Byju’s. At the same time, Redwood, a lender known to primarily trade in distressed debt, is eyeing increasing its exposure by acquiring a sizeable stake in the TLB with the intent of making windfall gains.

Byju’s has also issued a notice to the Redwood entities, disqualifying them. Once such disqualification takes effect, Redwood would be restrained from exercising critical rights under the TLB.

Since the proceedings in the matter are now in New York and Delaware court, Byju’s said that he won’t be making any further payments to TLB lenders, including any interest. However, the edtech firm said that it is open to discussions with the TLB lenders and is ready, willing, and able to continue making payments under the TLB if the lenders withdraw their ill-conceived actions and honour the terms of the agreement.

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