One of the quickest growing ed-tech startups Byju’s Alpha has been on the media radar consistently since the last year. Now in the latest update, lenders have accused Byju’s Alpha has hidden $500 million.
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The company is in the biggest fight with the creditors who have filed a lawsuit to know who should be given control of Byju’s Alpha. On Thursday in Delaware, a court hearing saw the lenders claiming that since the company is in default since earlier this year, they have the right to have their representative Timothy R. Pohl in charge of the company.
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The long-standing dispute seems to be the newest setback for the self-proclaimed world’s promising startup that has been founded by Byju Raveendran.
Byju’s were already working with the creditors for the restructuring of a $1.2 billion term loan when government officials searched the company offices in April this year.
The lenders allege that Byju’s Alpha failed to disclose the $500 million in loans it had taken out from other creditors. They are also seeking to investigate the company’s financial practices and to ensure that there are no other hidden liabilities.
Based in Bengaluru, the company has been working hard to gain an initial public offering of its tutoring service unit for many years.
Early in 2023, Byju’s creditors started a standoff wherein the top manager of Byju’s Alpha accepted to transfer half a billion dollars out of the company, said one of the lawyers supporting Pohl during the hearing.
A lawyer from Byju’s Alpha said that the company was trying to safeguard its money from exploitative lenders during the court hearing. He also opined that the company has the right to transfer the money as per the loan agreement.
In an interview with the media, Byju’s Alpha attorney Sheron Korpus said that the firm is present on all debt payments and if there are any defaults, that’s when the company should be charged under the technical breaches of the loan agreement.
The lawsuit has been filed in court by Glas Trust Company against Byju’s Alpha, its director, Riju Ravindran, and Tangible Play Inc.
The two companies being sued are units of Think and Learn Private, the ed-tech giant started by Byju Raveendran. Ravindran is also a director of Think and Learn, as per a regulatory filing.
During the hearing, it was found that Byju’s Alpha is merely a holding company that the lenders want to control in order to protect their rights. They are not wanting to take over the whole ed-tech company, said the lawyer in favor of the lenders.
For the unaware, Byju’s was one of the rising startups in India. When launched, the company’s success was driven by huge advertising campaigns and an aggressive acquisition strategy.
When the coronavirus pandemic hit the country in 2020, the company went on an acquisition spree and made smaller ed-tech companies such as Great Learning Pvt. Ltd., Epic!, Aakash Educational Services Ltd., WhiteHat Jr., Osmo, TutorVista, Edurite from Pearson as part of its big empire.