The Delaware Supreme Court has upheld a previous ruling from the Delaware Court of Chancery, affirming that an event of default occurred under the credit agreement involving BYJU’s and its US-based lenders. This ruling grants the lenders and their administrative agent, GLAS Trust, the right to take action against the company following a default in payments related to a USD 1.2 billion Term Loan B (TLB) secured through its holding entity, Byju’s Alpha.
The lenders filed their complaint with the Delaware Court of Chancery, alleging non-payment under the loan agreement and seeking immediate repayment of the TLB. BYJU’s parent company, Think and Learn, contested the allegations, however, the court ruled in favour of the lenders.
The steering committee representing the ad hoc group of term lenders stated that BYJU’s founder and CEO, Byju Raveendran, along with his brother Riju Ravindran, acknowledged the default by October 2022. “We are gratified that the Delaware Supreme Court decisively affirmed what we have known all along BYJU’s breached and defaulted on the credit agreement it knowingly and willingly entered into”, the committee remarked.
The committee emphasized that this ruling validates the lenders’ contractual rights to accelerate the Term Loan and regain control of BYJU’s Alpha Inc. Additionally, they noted that the court’s decision reflects that the series of amendments to the credit agreement, signed in October 2022 to January 2023, confirm BYJU’s admission of default and the associated consequences.
Despite inquiries, BYJU’s has not provided an immediate response. The US-based lenders, through GLAS Trust, have filed claims amounting to USD 1.35 billion in Indian Courts during ongoing insolvency proceedings against the edtech firm, recently increasing their total claim to USD 1.5 billion. The committee criticized BYJU’s attempts to present an alternate narrative regarding the company’s financial situation, asserting that the lender’s actions have been appropriate at all times and characterizing BYJU’s statements as misleading.
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