“US Creditors of Byju’s Seek Bankruptcy for Subsidiaries Over Unpaid Debt”

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US creditors of Byju’s, the Indian edtech giant, have initiated bankruptcy proceedings against its subsidiaries following the non-repayment of a significant loan.

Byju’s US Subsidiaries Face Bankruptcy Amid Unpaid 1.2 Billion USD Debt
Byju’s US Subsidiaries Face Bankruptcy Amid Unpaid 1.2 Billion USD Debt

US creditors of Byju’s, the Indian edtech giant, have initiated bankruptcy proceedings against its subsidiaries following the non-repayment of a significant loan.

According to Bloomberg reports, creditors led by HPS Investment Partners have filed involuntary Chapter 11 bankruptcy cases in Delaware against several subsidiaries of Byju’s, including Neuron Fuel Inc., Epic! Creations Inc., and Tangible Play Inc. These entities are affiliated with Byju’s Alpha, a unit of Byju’s that had previously entered bankruptcy earlier this year due to defaulting on a staggering 1.2 billion USD (approximately Rs. 10,009 crore) debt.

Glas Trust, a US-based non-banking loan agency, has been appointed by more than 100 lenders as an administrative agent for the term loan. The creditors allege that Byju’s management, including its founders and directors Byju Raveendran, Riju Ravindran, and Divya Gokulnath, has shown no intention or ability to honor its financial obligations. They further claim that the founders unlawfully diverted a substantial sum of 533 million USD (about Rs. 4,445.8 crore) in loan proceeds, the whereabouts of which remain undisclosed.

The situation escalated when the US bankruptcy court announced penalties against Riju Raveendran, the brother of Byju’s founder and CEO Byju Raveendran, for failure to disclose or locate the whereabouts of the 533 million USD term loan money, which is part of the defaulted 1.2-billion USD loan.

Byju’s, once hailed as a tech unicorn with a valuation of 22 billion USD (approximately Rs. 1.83 lakh crore), has encountered financial challenges as demand for its tutoring services declined with the easing of pandemic restrictions and the reopening of schools. The pandemic-induced shift in learning preferences has significantly impacted Byju’s revenue streams, leading to struggles in meeting its debt obligations.

The bankruptcy proceedings mark a significant development in Byju’s financial saga, highlighting the complexities faced by tech companies in navigating financial turbulence amidst evolving market conditions and changing consumer behaviors.

Sources By Agencies

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