Delaware Supreme Court Affirms BYJU's Default On $1.2 Billion Term Loan

BYJU's secured $1.2 billion through Term Loan B (TLB) via its holding company, Byju's Alpha, with the loan issued by institutional investors

The Delaware Supreme Court has upheld a previous ruling confirming that the edtech firm BYJU's has defaulted on its Term Loan B, a significant financial decision affecting the company's operations. The ruling comes as BYJU's US-based lenders announced the court's affirmation of the Delaware Court of Chancery's earlier decision, which stated that an event of default had occurred under the credit agreement.

BYJU's secured $1.2 billion through Term Loan B (TLB) via its holding company, Byju's Alpha, with the loan issued by institutional investors. The lenders, represented by GLAS Trust as their administrative agent, filed a complaint with the Delaware Court of Chancery, alleging defaults in payment and seeking the early repayment of the loan.

In response to the lenders' claims, Think and Learn, the owner of the BYJU's brand, contested the default allegations. However, the Delaware Court of Chancery ruled in favor of the lenders, confirming the default.

According to a statement from the steering committee of the ad hoc group of term loan lenders, BYJU's founder and CEO Byju Raveendran and his brother, Riju Ravindran, acknowledged the company's default on the credit agreement as early as 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 stated. They highlighted that the ruling confirmed the acknowledgment of default by Raveendran and Ravindran during various amendments to the credit agreement from October 2022 to January 2023.

The lenders have also raised their claims against BYJU's in ongoing insolvency proceedings in Indian courts, now totaling $1.5 billion, up from the initial $1.35 billion. The committee stated that the Delaware Supreme Court's ruling reinforces the lenders' rights to accelerate the loan and take control of BYJU's Alpha Inc.

The lenders criticised BYJU's attempts to dispute the ruling, claiming that the company's narrative of non-default is unfounded. "It is his unreliable word against that of the highest court in the State of Delaware," the committee remarked, highlighting that the court's decision is a clear affirmation of the lenders' position.

Furthermore, the committee noted that the court's ruling clarified that the series of amendments made to the credit agreement between October 2022 and January 2023 unequivocally indicated BYJU's voluntary concession of the default events and the legal implications thereof, enabling GLAS Trust to exercise its remedies.