“Trouble for Byju’s as Foreign Lenders File Bankruptcy Petition, Reports Say”
Byju’s, one of India’s leading ed-tech platforms, is grappling with a mounting financial crisis as international lenders reportedly filed an insolvency petition against the company. The move comes amidst an ongoing dispute over the utilization of funds and missed payments, leading to a heightened confrontation between Byju’s and its creditors.
Byju’s, one of India’s leading ed-tech platforms, is grappling with a mounting financial crisis as international lenders reportedly filed an insolvency petition against the company. The move comes amidst an ongoing dispute over the utilization of funds and missed payments, leading to a heightened confrontation between Byju’s and its creditors.
According to reports, the foreign investors, who collectively extended over 85 percent of Byju’s $1.2 billion term loan, have initiated insolvency proceedings before the National Company Law Tribunal (NCLT). Byju’s responded by dismissing the actions as “baseless and premature,” emphasizing that the validity of lenders’ actions, including the acceleration of the term loan, is currently under challenge in various proceedings, including before the New York Supreme Court.
In a statement issued on January 25, Byju’s reiterated, “The validity of lenders’ actions, including acceleration of the term loan, is pending and under challenge in several proceedings, including before the New York Supreme Court.”
The financial turmoil stems from Byju’s inability to meet payments, leading to a dispute over the use of funds provided by lenders. Byju’s had secured the substantial $1.2 billion term loan in November 2021, with the agreement including amendments to the loan terms, encompassing pricing and tenure adjustments.
Moneycontrol reported that the foreign lenders have enlisted the services of a prominent law firm to pursue bankruptcy claims, with notices already issued to Byju’s in this regard. The dispute underscores the challenges faced by the ed-tech firm, once valued at $22 billion, as it navigates a competitive landscape in the wake of increased competition in the edtech sector during the pandemic.
Founder Byju Raveendran attracted significant investment from major players in the tech industry, including Mark Zuckerberg’s Chan Zuckerberg Initiative, Silver Lake Management, and Naspers Ltd. However, the company has witnessed financial setbacks amid rising competition in the edtech space, contributing to its losses.
The insolvency petition further complicates Byju’s financial outlook, raising concerns about the future of one of India’s prominent ed-tech platforms. The developments will be closely monitored as the company and lenders continue to grapple with the evolving financial challenges.
Sources By Agencies
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