Delaware Supreme Court rules Byju’s defaulted on $1.2 billion term loan

MUMBAI: In a ruling that favours Byju’s US lenders, the Delaware Supreme Court upheld a judgement of a lower court which had stated that struggling startup Byju’s is in default of $1.2 billion loan. The Supreme Court ruling delivered earlier this week effectively validates the lenders’ move to take control of the startup’s US unit Byju’s Alpha which was set up to receive the term loan and appoint their representative Timothy Pohl as the entity’s sole director.The court said that Byju’s must be held accountable for its defaults and the company cannot distance itself from conceding to those defaults and their consequences.
“….this ruling confirms that Byju’s was in default, which both Byju (Raveendran) and Riju (Ravindran) personally acknowledged when they signed multiple amendments to the credit agreement on Byju’s behalf from October 2022 to January 2023. As such, and as validated by the Delaware Supreme Court, the lenders were well within their contractual rights to accelerate the term loan and take control of Byju’s Alpha,” the lenders said in a statement on Tuesday.
Byju’s and its term loan lenders have been embroiled in a legal battle over the repayment of the loan which was raised by the startup in 2021 to fund its overseas expansion. Once valued at $22 billion, Byju’s today is facing insolvency proceedings after the Supreme Court of India, on a plea filed by the lenders, stayed a National Company Law Appellate Tribunal (NCLAT) order approving the settlement between the company and the Board of Control for Cricket in India (BCCI).
The lenders represented by their agent Glas Trust said that Raveendran has attempted to “concoct an alternate narrative that Byju’s did not default and to place the blame of the company’s failures on others rather than repay lenders money that is rightfully owed to us, including disclosing what happened to the $533 million of missing loan proceeds.” In a statement, Byju’s said that the conclusion of the Delaware Court has no bearing on the ongoing legal proceedings in India. “The issue of the validity of the acceleration and subsequent enforcement actions taken by Glas under the credit agreement is still pending adjudication before the New York Supreme Court, which is the only court that has the jurisdiction to do so under the credit agreement,” the startup said.