Byju’s, the renowned ed-tech startup, has raised serious allegations against its lenders. According to Sheron Korpus, the company’s lawyer, the lenders are employing deceptive tactics in the loan restructuring negotiations to gain an advantage and create difficulties for Byju’s leadership.
Fake Default Claims and Extortionate Demands
The allegations came to light during a court hearing in Delaware, where Byju’s lawyer accused the lenders associated with the $1.2 billion loan of using bogus default claims. This move, according to Korpus, is an attempt to gain an upper hand over the firm. The lenders named in the report include Redwood Investments LLC and Silver Point Capital LP, both U.S. investment firms. They are alleged to be making extortionate demands on the company, placing immense pressure on its operations.
Byju’s Fights Back
In response to the lenders’ claims, Byju’s has requested the judge to reject these default claims. The case is currently under consideration, and the judge is expected to rule on it at a later date. The lenders, however, deny the allegations, contending that the company consistently failed to adhere to the terms of the loan agreement and acknowledged the defaults.
The Ongoing Conflict
This legal dispute adds to the troubles faced by the Indian ed-tech startup, founded by Byju Raveendran in 2011. Earlier in April, government investigators raided the company’s offices, and since then, Byju’s has been working with creditors to restructure its $1.2 billion term loan, raised in November 2021. The negotiations between the company and the lenders have been ongoing for several months, and both parties missed the recent deadline to decide on loan amendment terms.
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