Byju’s lenders petition to put subsidiaries in bankruptcy in the US
Last Updated: Jun 05, 2024, 07:53:00 PM IST
Creditors led by HPS Investment Partners filed involuntary Chapter 11 cases in Delaware against Neuron Fuel Inc., Epic! Creations Inc. and Tangible Play Inc. on Wednesday. All three were once affiliated with Byju’s Alpha, a unit of the once high-flying startup that was put into bankruptcy earlier this year after defaulting on $1.2 billion of debt.
A section of lenders in a consortium that lent $1.2 billion to Byju's said they have petitioned a US court to initiate bankruptcy proceedings against the company’s Epic , Tynker and Osmo subsidiaries . Poll Trackers Leaders flock to Delhi after BJP fails to get absolute majority| Catch it all live Lost majority, but BJP has breached these citadels for the future Weaker Modi 3.0 to slow India's big fiscal fight: Moody’s The lenders had been in negotiations with the company over prepayment of the term loan taken by the edtech firm through another subsidiary, Byju's Alpha . While this group of lenders have sought to initiate court-monitored restructuring of the three subsidiaries under Chapter 11 of the US Bankruptcy Code, the two sides also continue to fight another legal battle in American courts over the loan.
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Byju's has been trying to sell Epic for the past many months, but existing litigation with lenders as well as investors has hit the chances of any sale.
In a statement on Wednesday, the group of lenders said their petition in a bankruptcy court in Delaware is aimed at protecting and maximising the value of Byju’s US-based operating entities for the benefit of all stakeholders and prevent further diversions of assets and corporate mismanagement.
Chapter 11 provides protection to the bankrupt company from creditors during the restructuring process.
Discover the stories of your interest Blockchain 5 Stories Cyber-safety 7 Stories Fintech 9 Stories E-comm 9 Stories ML 8 Stories Edtech 6 Stories A Byju’s spokesperson did not respond to ET’s request for comment.
“Among other important goals, we have taken this action to protect and preserve the value of Epic, Neuron Fuel (Tynker) and Tangible Play (Osmo). We remain committed to their success and stand ready to infuse the capital necessary to reorganise the businesses,” the lender group said.
Late last month, the group of lenders had also said the US bankruptcy court was set to impose penalties on the edtech company’s board member Riju Ravindran for not disclosing or ascertaining the location of the term loan money that is at the centre of a dispute.
Ravindran is the brother of Byju’s founder and chief executive Byju Raveendran.
Judge John Dorsey of the US Bankruptcy Court for the District of Delaware said Ravindran’s testimony “lacks all credibility” , and subsequently found him in contempt for not disclosing or ascertaining the location of term loan proceeds amounting to $533 million.
This amount is part of the $1.2-billion loan which was housed under Byju's US subsidiary, Byju's Alpha.
Byju’s had not commented on the matter at that time.
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