Foreign lenders file insolvency proceedings against Byju’s before NCLT Bangalore bench: Report
In July 2023, it was reported that the Byju Raveendran-founded edtech firm has reached a tentative agreement to rework its loan pact with its foreign lenders. The lenders collectively own more than 85 per cent of the $1.2 billion Term B loan.
- Jan 25, 2024,
- Updated Jan 26, 2024 9:20 AM IST
Overseas lenders have reportedly filed an insolvency petition against embattled edtech major Bjyu's earlier this year. The bankruptcy petition was filed earlier this week in the Bengaluru bench of the National Company Law Tribunal ( NCLT), Moneycontrol reported on Thursday.
The ad hoc group of lenders (the Ad Hoc Group), which lent $1.2 billion as term loans to Byju’s, said GLAS Trust Company LLC had filed a petition against Think & Learn (doing business as Byju’s) before the Bench. GLAS Trust Company LLC is the administrative agent and collateral agent of the Term Loans.
In July 2023, it was reported that the Byju Raveendran-founded edtech firm has reached a tentative agreement to rework its loan pact with its foreign lenders. The lenders collectively own more than 85 per cent of the $1.2 billion Term B loan.
In a response to Moneycontrol's query on the development, the company said that 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.
Byju’s raised $1.2 billion through a term loan B from overseas investors in November 2021 at a time when interest rates were low. A Term Loan B (TLB) is generally designed to generate long-term returns on investment by paying interest to investors, while the borrower is given the opportunity to repay the principal amount only at the end of the loan term.
On June 6, 2023, Byju's had missed paying a $40 million interest to its TLB creditors after which it filed a lawsuit in New York on the same day.
In September, Byju’s clarified that the funds raised through TLB were invested in high-grade fixed income assets. This statement was made in response to allegations of concealing the money from lenders by placing it in an obscure hedge fund.
It was also reported in September that the embattled edtech firm is trying to sell two of its businesses -- Epic and Great Learning -- to pay off its term loan B lenders. Byju's had acquired both assets during the peak of 2021 to build its $22 billion empire.
In a separate case, Byju’s is in talks with the Board of Control for Cricket in India (BCCI) to settle its unpaid sponsorship dues of Rs 158 crore. It was reprted that both sides have agreen upon a 'directional agreement' on a payment plan over the next six to eight months.
The cricket body had lodged an insolvency case under insolvency and bankruptcy regulation in the National Company Law Tribunal (NCLT) in December to recover its unpaid dues.
A week back, the edtech firm’s lawyers said that the company has filed an application to refer its dispute with the BCCI to an arbitrator. The NCLT said that the arbitration may not come in the way of proceedings initiated by the BCCI under the Insolvency and Bankruptcy Code, 2016.
The NCLT was further informed that Byju’s is currently engaged in negotiations with the BCCI to settle the dispute.
“We have filed an application under the Arbitration Act for reference of the dispute to arbitration. The case filed by BCCI entails many disputed questions of law and facts, and those disputes need to be decided by an arbitral tribunal,” said Pramod Nair, Byju's advocate.
On the other hand, counsel for the BCCI denied any negotiations and sought time to consult with the BCCI.
The Bengaluru bench's NCLT said the arbitration application would have no bearing on the insolvency proceedings and deferred the hearing to February 7, allowing the BCCI to file a reply to Byju’s objections.
Bjyu's initially signed a jersey sponsorship agreement with the BCCI in March 2019 for a period of three years, which was later extended by one year.
Byju's reportedly made payments up till September 2022. BCCI has raised objections on payments from October 2022 till March 2023. The edtech reportedly wanted to terminate the agreement last year, but was asked by the Board to continue till March 2023.
Earlier this month, the edtech firm finally disclosed its financial results for the fiscal year 2022. Byju's consolidated revenue saw a surge of 54.2 percent, climbing from Rs 2,428 crore in FY21 to Rs 5,298 crore in FY22. The company reported a net loss of Rs 8,245 crore in FY22, up from Rs 4,564 crore in FY21.
Also read: Byju's net loss soars to Rs 8,245 cr in FY22, revenue jumps 54.2%: Report
Overseas lenders have reportedly filed an insolvency petition against embattled edtech major Bjyu's earlier this year. The bankruptcy petition was filed earlier this week in the Bengaluru bench of the National Company Law Tribunal ( NCLT), Moneycontrol reported on Thursday.
The ad hoc group of lenders (the Ad Hoc Group), which lent $1.2 billion as term loans to Byju’s, said GLAS Trust Company LLC had filed a petition against Think & Learn (doing business as Byju’s) before the Bench. GLAS Trust Company LLC is the administrative agent and collateral agent of the Term Loans.
In July 2023, it was reported that the Byju Raveendran-founded edtech firm has reached a tentative agreement to rework its loan pact with its foreign lenders. The lenders collectively own more than 85 per cent of the $1.2 billion Term B loan.
In a response to Moneycontrol's query on the development, the company said that 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.
Byju’s raised $1.2 billion through a term loan B from overseas investors in November 2021 at a time when interest rates were low. A Term Loan B (TLB) is generally designed to generate long-term returns on investment by paying interest to investors, while the borrower is given the opportunity to repay the principal amount only at the end of the loan term.
On June 6, 2023, Byju's had missed paying a $40 million interest to its TLB creditors after which it filed a lawsuit in New York on the same day.
In September, Byju’s clarified that the funds raised through TLB were invested in high-grade fixed income assets. This statement was made in response to allegations of concealing the money from lenders by placing it in an obscure hedge fund.
It was also reported in September that the embattled edtech firm is trying to sell two of its businesses -- Epic and Great Learning -- to pay off its term loan B lenders. Byju's had acquired both assets during the peak of 2021 to build its $22 billion empire.
In a separate case, Byju’s is in talks with the Board of Control for Cricket in India (BCCI) to settle its unpaid sponsorship dues of Rs 158 crore. It was reprted that both sides have agreen upon a 'directional agreement' on a payment plan over the next six to eight months.
The cricket body had lodged an insolvency case under insolvency and bankruptcy regulation in the National Company Law Tribunal (NCLT) in December to recover its unpaid dues.
A week back, the edtech firm’s lawyers said that the company has filed an application to refer its dispute with the BCCI to an arbitrator. The NCLT said that the arbitration may not come in the way of proceedings initiated by the BCCI under the Insolvency and Bankruptcy Code, 2016.
The NCLT was further informed that Byju’s is currently engaged in negotiations with the BCCI to settle the dispute.
“We have filed an application under the Arbitration Act for reference of the dispute to arbitration. The case filed by BCCI entails many disputed questions of law and facts, and those disputes need to be decided by an arbitral tribunal,” said Pramod Nair, Byju's advocate.
On the other hand, counsel for the BCCI denied any negotiations and sought time to consult with the BCCI.
The Bengaluru bench's NCLT said the arbitration application would have no bearing on the insolvency proceedings and deferred the hearing to February 7, allowing the BCCI to file a reply to Byju’s objections.
Bjyu's initially signed a jersey sponsorship agreement with the BCCI in March 2019 for a period of three years, which was later extended by one year.
Byju's reportedly made payments up till September 2022. BCCI has raised objections on payments from October 2022 till March 2023. The edtech reportedly wanted to terminate the agreement last year, but was asked by the Board to continue till March 2023.
Earlier this month, the edtech firm finally disclosed its financial results for the fiscal year 2022. Byju's consolidated revenue saw a surge of 54.2 percent, climbing from Rs 2,428 crore in FY21 to Rs 5,298 crore in FY22. The company reported a net loss of Rs 8,245 crore in FY22, up from Rs 4,564 crore in FY21.
Also read: Byju's net loss soars to Rs 8,245 cr in FY22, revenue jumps 54.2%: Report