New York, June 5 (SocialNews.XYZ) A group of lenders on Wednesday petitioned against new entities, tied to embattled edtech company Byju's US subsidiary, into bankruptcy in a US court, alleging that these entities are not paying their debts.
The group of lenders, which gave Byju's Alpha $1.4 billion term-loan, petitioned against Neuron Fuel Inc., Epic! Creations Inc. and Tangible Play Inc. to Chapter 11 of the US Bankruptcy Code to initiate involuntary proceedings against them, in the Delaware court.
The lenders said in a statement that since Byju's began to default (on $1.2 billion of debt) on its term-loan obligations, "we have made every effort possible to work productively and collaboratively to help Byju's cure its multiple defaults".
"However, it is clear that Byju's management has no intention or ability to honour its obligations under the Term Loans. Indeed, BYJU's founders, who also serve as the three directors of the overall enterprise - Byju Raveendran, Riju Ravindran, and Divya Gokulnath - unlawfully diverted $533 million in loan proceeds, the whereabouts of which are still unknown," the creditors alleged.
The edtech company had earlier claimed that no funds have been siphoned off and around $533 million are "currently in a 100 per cent non-US subsidiary of the company".
The lenders further said that as a result of Byju's failed leadership and mismanagement, significant harm has been done to the company's businesses and the value of the company’s assets.
"Shareholders and lenders to the company have seen the value of their investment deteriorate, employees and vendors have not been paid in a timely manner, and customers have suffered," the lenders said.
Once valued at $22 billion, the edtech company's valuation has plummeted around 95 per cent after investors cut their stakes in several rounds.
The group of lenders said with their action, "Epic!, Neuron Fuel, and Tangible Play will benefit from much-needed oversight while a plan is developed to maximise the value of these assets for the benefit of all stakeholders."
In 2021, Byju's Alpha was established as a US subsidiary to receive proceeds of the Term Loans.
"Byju's first breach occurred no later than March 16, 2022, when it failed to furnish required unaudited quarterly financial information," claimed lenders.
In February 2024, Byju's Alpha had filed for Chapter 11 bankruptcy protection in the US.
Source: IANS
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