US court backs Byju’s lenders over $1.2 bn loan default, edtech firm responds
As a result of the ruling, the Court of Chancery's order that held Byju's to be in default of $1.2 Billion has attained a stamp of approval by Delaware's highest court of appeal.
Representative image (BYJU'S)
NEW DELHI: A US court has upheld an earlier ruling that found embattled edtech firm Byju's in default on its $1.2-billion Term Loan B.
The Delaware Supreme Court upheld the ruling in favour of Byju's lenders represented by Glas Trust LLC. As a result of the ruling, the Court of Chancery's order that held Byju's to be in default of $1.2 Billion has attained a stamp of approval by Delaware's highest court of appeal.
The $1.2-billion loan was provided to Byju’s by a syndicate of 37 financial institutions.
In August 2023, the Delaware Court of Chancery ruled in favour of Glas, stating that the lenders were within their rights to enforce the agreement.
For collateral, Think and Learn Pvt Ltd's Delaware subsidiary, Byju's Alpha, had pledged 100 per cent of its equity as collateral for the term loans. Later, Glas delivered a notice of default to Byju's.
After securing control of Byju's Alpha in its capacity as the sole stockholder, Glas filed a complaint in the Court of Chancery, seeking a declaration that their actions taken by written consent were valid.
In a statement, Byju’s said the Delaware ruling has no bearing on lender disqualification rights, loan acceleration and Glas' legal standing in India.
“Byju’s wants to emphasise that the recent conclusion reached by a Delaware court has no bearing on the ongoing legal proceedings in India. In any event, the Delaware Supreme Court has merely upheld a limited ruling by the Chancery court on the validity of one of their nominees as the director of the shell company, BYJU’S Alpha Inc,” the company said.
The edtech firm further said it “strongly contests the inflated and illegal claims made by Glas Trust and maintains that their actions are detrimental to all stakeholders involved”.