Byju’s Loses One Of Its Units To Lenders After $1.2 Billion Loan Default
Troubled ed-tech firm Byju’s has faced another hurdle that could further complicate its road to recovery. A Delaware judge has ruled in favor of its lenders in the ongoing $1.2 billion loan dispute.
The judge determined that the lenders, including Redwood Investments LLC and Silver Point Capital LP, were within their contractual rights to take control of a unit of Byju’s, known as Byju’s Alpha, due to a default on the loan, reported Bloomberg News.
The lenders replaced a board member of Byju’s Alpha, who was a relative of the company’s founder, Byju Raveendran, with their own nominee.
The judge, Morgan Zurn, rejected Byju’s complaint that the appointed overseer, Timothy Pohl, was improperly authorized to take control. Zurn stated that Pohl was effectively the sole director of Byju’s Alpha due to the defaults.
Byju’s has been grappling with the repayment of the $1.2 billion loan, aggravated by the waning of the online learning boom during the pandemic.
The company had been working on selling assets and resolving the loan issue when government investigators conducted searches at its offices, further complicating its situation. As a result of the lender dispute, some investors have devalued their stakes in one of the world’s largest ed-tech firms.
Earlier this year, a lawyer for the lenders argued that Byju’s Alpha was established as a holding company to protect their rights. They clarified that their intention was not to take over the entire ed-tech company.
