Byju’s Alleges Lenders Using Bogus Default Claims On $1.2 Billion Loan To Seek Control: Report

Sheron Korpus, Byju's lawyer, noted in court that the lenders are “playing hardball” to gain an advantage in loan restructuring negotiations and make things difficult for Byju’s leadership. 

Byju’s has accused it’s lenders of creating bogus default claims to get control over the ed-tech firm. The start-up’s lawyer told a judge in a state court in Delaware on Friday that the lenders tied to the $1.2 billion loan for the startup are trying to gain an upper hand on the firm by using fake default claims. 

According to a report by Bloomberg, Sheron Korpus, the ed-tech firm’s lawyer, noted in court that the lenders are “playing hardball” to gain an advantage in loan restructuring negotiations and make things difficult for Byju’s leadership. 

Korpus told Judge Morgan Zurn that the lenders, including U.S. investment firms Redwood Investments LLC and Silver Point Capital LP are “making extortionate demands” of the company, putting it “under a lot of pressure”, the report noted. 

Byju’s has requested the judge to rebuff the default claims of the lenders. The judge noted that she will rule later on the case. 

The lenders’ lawyer dismissed the start-up’s claims, adding that the company repeatedly failed to adhere to loan agreement terms and acknowledged the defaults. Lawyer Brock Czeschin further added that filing suit over the loans “is not predatory behaviour”. 

Korpus claimed that the company still wants to discuss and make a deal to resolve the conflict, but the lenders are using bogus default claims to wrongfully “seize control” of the firm from it’s founders. 

The conflict is another page in the book of troubles for the Indian ed-tech startup, founded by Byju Raveendran in 2011. Earlier in April, the company’s offices were raided by government investigators, while it was trying to figure out how to work with the creditors to restructure it’s $1.2 billion term loan, raised in November 2021. 

The conversation between the company and lenders to restructure the loan has been going on for months now. Recently, both parties missed the August 3 deadline for deciding on loan amendment terms.