BYJU’S lawyer Sheron Korpus said that the distressed-debt lenders are ‘playing hardball’ to create leverage in negotiations to restructure the loan
Brock Czeschin, appearing for the lenders, rebuffed claims of predatory behaviour, stating that the edtech has repeatedly violated the loan agreement’s terms
BYJU’S and the steering committee of lenders also missed an August 3 timeline to sign off an amendment to the loan, which would have ended litigation in the US
During court proceedings at the state court in Delaware, BYJU’S has accused the lenders of its $1.2 Bn term loan B (TLB) of creating bogus default claims as part of a scheme to gain control of the edtech giant.
Per a Bloomberg report, the lawyer, Sheron Korpus, added that the distressed-debt lenders are ‘playing hardball’ to create leverage in negotiations for restructuring the loan. Korpus further added that lenders, including US investment firms Redwood Investments LLC and Silver Point Capital LP, are ‘making extortionate demands’ of BYJU’S.
According to the report, citing Korpus, the edtech is still keen on reaching a resolution with the lenders despite the dispute.
Delaware Chancery Court Judge Morgan Zurn has said she’d rule later on the case.
Brock Czeschin, appearing for the lenders, rebuffed the accusations of predatory behaviour, asserting that BYJU’S has repeatedly violated the terms of the loan agreement and has acknowledged the defaults.
The ongoing dispute in Delaware and New York adds to BYJU’S worries, as the edtech giant continues to work on appeasing creditors to restructure the $1.2 Bn loan. The TLB, taken by BYJU’S in November 2021, has been shrouded in controversy since last December. The back-and-forth between the edtech and its lenders devolved into litigation from both parties.
The uncertainty caused by the legal tussle, along with delayed financial reporting, has also prompted BYJU’S investors to write down their stakes, including Prosus and Peak XV Partners.
The steering committee of the lenders, which own 85% of BYJU’S Term Loan B, had committed to a timeline of August 3 to sign off an amendment, which would have ended legal proceedings in the US. However, the lenders and BYJU’S have missed the deadline.
While the edtech said on Friday (August 4) that the proceedings are going ‘in the right direction’, it also said August 3 was an optimistic deadline. For now, BYJU’S is set for a round of talks with the committee early next week.
The edtech giant is also said to be engaged in a tussle with Davidson Kempner, which gave a debt funding of $250 Mn in May this year. Davidson Kempner has reportedly forced changes in the Aakash board, bringing in two independent directors, though both parties are tight-lipped about the goings-on.
