BYJU’s Term Loan Lenders Initiate Corporate Insolvency Resolution Proceedings Against Think & Learn Pvt Ltd in India

Follows Persistent Lack of Engagement by BYJU’s Management Despite Company’s Events of Default on US$1.2 Billion Term Loan Since November 2022

NEW YORK–(BUSINESS WIRE)–The ad hoc group of term loan lenders (the “Ad Hoc Group”) of BYJU’s $1.2 billion term loans (“Term Loans”), announced today that GLAS Trust Company LLC (as administrative agent and collateral agent of the Term Loans) has filed a petition pursuant to section 7 of the Insolvency and Bankruptcy code of India, 2016 to initiate corporate insolvency resolution proceedings against Think & Learn Pvt Ltd (doing business as BYJU’s) (“Think & Learn” or “BYJU’s” or the “Company”) before the Bengaluru Bench of the National Company Law Tribunal (such proceedings being the “BYJU’s CIRP”).

This action was taken following over 16 months of good faith efforts on behalf of the Ad Hoc Group to restructure the term loans, which, if successful, would have immediately solved for the loan’s numerous outstanding defaults, acceleration, and ended all open litigation while avoiding further enforcement actions.

In November 2023, the Delaware Chancery Court recognized that BYJU’s had defaulted on its loan obligation and found that the Term Loan lenders were within their contractual rights to replace the sole director of BYJU’s Alpha (the U.S. subsidiary of BYJU’s established in 2021 to receive proceeds of the term loans).

BYJU’s has exacerbated its defaults and repeatedly disregarded its loan obligations post-default, including: ­­

• Refusing to make any contractually required loan payments;
• BYJU’s Alpha transferring $533 million in loan proceeds to an obscure, nascent hedge fund and then apparently transferring the ownership of the money to a still undisclosed entity. To date, the former director at BYJU’s Alpha (who was appointed by BYJU’s) and the management of BYJU’s continue to refuse to provide any specific information on the status of such funds to the lenders under the Term Loans or even the new director of BYJU’s Alpha;
• Seeking to retain a substantial portion of the proceeds from the contemplated sale of Epic!, despite the lenders’ senior secured claims on Epic!’s assets and the clear requirements of the credit agreement;
• Significantly delaying its financial reporting obligations, not approving the FY 2021-22 audit, which was due in September 2022, until December 2023, and only made public filing of such financial statements after the lenders filed for the BYJU’s CIRP.

In connection with the petition filing, the Ad Hoc Group issued the following statement:

“The myriad issues facing BYJU’s are entirely self-inflicted. For months, we sought to avoid this exact situation, repeatedly attempting to engage constructively with BYJU’s management and other stakeholders and providing them with multiple paths to reach a mutually agreeable resolution, even including after the Delaware court confirmed the validity of BYJU’s’ defaults. It is our belief now that BYJU’s management has no intention or ability of honoring its obligations under the Term Loans. That said, we are hopeful that India’s corporate insolvency resolution process will help stabilize Think & Learn and result in implementing a resolution plan that accounts for the interests of all stakeholders.”

Contacts

Nathaniel Garnick/Amanda Shpiner/Sam Fisher

Gasthalter & Co.

+1 (212) 257-4170

byjus-lenders@gasthalter.com