US lenders counter BYJU'S claim on debt, say edtech firm has to pay entire $1.2B term loan B

US lenders represented by Glas Trust have countered BYJU'S founder Byju Raveendran's claim on verified debt on the company being merely around Rs 20 crore, and have said that the beleaguered edtech firm will have to pay the entire $1.2 billion term loan B along with interest.

The founder of Think and Learn (TLPL) and owner of the BYJU'S brand, Byju Raveendran, had, about a week ago, said that verified debt on the company is only Rs 20 crore as per insolvency proceedings and he may not have to pay any money to the US lenders represented by Glas Trust.

"Neither Byju nor the IRP (insolvency resolution professional) have the authority to disqualify any term loan lender 'and even if they did, BYJU's would still be obligated to repay the full amount of the loan plus interest. Any argument otherwise is illegitimate, and Byju knows it," a steering committee of the ad hoc group of term loan lenders to Byju's Alpha, Inc said in a statement.

Glas Trust has sued BYJU'S for the recovery of the $1.2 billion term loan B in the United States as well as in India.

The financial trouble of once the most-valued Indian edtech firm BYJU'S started after US-based lenders started legal action against the company to recover the $1.2 billion term loan B.

The lenders have alleged that BYJU'S group firm BYJU'S Alpha secured $1.2 billion term loan B, which is a loan given by institutional investors, and moved $500 million out of the US in breach of loan agreement norms.

BYJU'S has countered the allegation levelled by the lenders.

The lenders panel said almost all key personnel have abandoned BYJU's, including the chief executive officer, chief financial officer, and the general counsel, and it has now seen a second auditor resign in less than two years due to BYJU'S inability to explain away the whereabouts of the $500 million, among other reasons.

According to BYJU'S, lenders represented by Glas Trust wrongly accelerated the loan in March 2023 which was to be repaid in November 2026.

The insolvency resolution professional has not admitted the $1.35-billion debt claim made by Glas Trust during an ongoing insolvency proceedings against BYJU'S.

The lenders' panel said BYJU'S does not have the power to disqualify any lenders and the power belongs exclusively to Timothy R Pohl, as the sole director and officer of BYJU's Alpha, Inc, as recognised by the Delaware court, and Pohl has never disqualified any lender.

The lenders' panel said that Raveendran continues to make false statements to the public in a desperate effort to conceal that he very likely orchestrated the theft of more than $500 million and shift the blame for his failures in managing Think & Learn.

Raveendran, however, maintains his stand on Glas Trust-represented lenders that they are not eligible to recover dues.

"Under the credit agreement, not just the borrower but even the parent company TLPL has the right to disqualify lenders. Tim Pohl is simply a nominee of the lenders. He does not have any powers to disqualify lenders, nor can his nomination take away the contractual right that TLPL has to disqualify lenders," Byju said.

The lenders' panel also countered Raveendran's statement that Glas-represented lenders will have to prove that they are not a distress fund in New York court to proceed on their demand which is difficult for them.

"Whether any lender is a ‘distressed fund’ is not on trial in New York. Additionally, the New York litigation is not a prerequisite to these proceedings," the panel said.

"The price of the TLB (term loan B) instrument has no bearing upon the validity of Glas' claim or the amounts owed by BYJU's. BYJU's borrowed $1.2 billion (plus interest). It does not need to pay more if loan trading prices go up, and it does not need to pay less if the loan trading prices go down. This is a basic tenet of how the finance markets work," the panel said.