BYJU’s files case against investment firm over $1.2 billion loan repayment

Byju’s, one of the country’s most valuable start-ups, has filed a suit in the New York Supreme Court, claiming investment firm Redwood had purchased a significant portion of the loan while primarily trading in distressed debt, which was contrary to the conditions of the term loan facility.
The online education start-up also issued a notice to Redwood entities disqualifying the investment firm as a lender with critical rights under the term loan norms once it takes effect, the company said in a statement on Tuesday.
“We had to take these steps following a series of predatory tactics by the lenders, led by Redwood,” the start-up said in the statement.
In March this year, the group of lenders unlawfully accelerated the term loan B due to certain alleged non-monetary and technical defaults, the company said, adding that the lenders undertook unwarranted enforcement measures, including seizing control of its US unit Byju’s Alpha and appointing its management.
The company also elaborated that it has chosen not to make any further payments to the term B loan providers, including any interest which may have accrued, until the financial dispute is decided by the top court.
Byju’s, has been involved in a dispute with its lenders over repayment of a huge loan that the start-up had taken for funding its ventures. It had also planned to make a quarterly interest payment of about $40 million on the loan that has been at the centre of the beleaguered firm’s monetary troubles, people familiar with the matter said.
The $1.2 billion debt is the largest unrated loan by a start-up ever. The once high-flying company led by former teacher Byju Raveendran had been trying to strike a deal with creditors to restructure the loan, after the sharp dip of the pandemic-era boom in online tutoring dealt a massive blow to its finances.
The creditors, however, demanded an accelerated repayment and scrapped the long-running negotiations, Bloomberg reported last week. The lender consortium has signed a cooperation agreement that binds them to act together in negotiations, according to media reports.
For the edtech firm, the troubles have just begun. Failure to pay on that date means the $1.2 billion loan will default.
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