Indian edtech giant BYJU’S is now embroiled in a legal battle in the United States, as one of its companies, Alpha Inc, is being sued in the Delaware court for the recovery of $1.2 billion. Glas Trust Company and investor Timothy R. Pohl filed the lawsuit against BYJU’S Alpha, Tangible Play, Inc., and Riju Ravindran, the director of Alpha Inc.
Details regarding the specific reasons for the lawsuit and the objectives of Glas Trust and Pohl have been redacted from court documents, leaving the nature of the dispute undisclosed. A telephonic hearing was scheduled in the Delaware Chancery Court to determine if the lawsuit warrants expedited proceedings. Judge Morgan Zurn, emphasizing the importance of court transparency, rejected BYJU’S and Ravindran’s request to keep the hearing’s content confidential.
The legal turmoil stems from BYJU’S failure to repay its loans, leading to the renegotiation of its credit agreement after breaching investor protections by missing the deadline to disclose annual financial results. Earlier this year, the company’s proposal to amend its debt terms by increasing the interest rate on its $1.2 billion term loan faced resistance from lenders. In response, a lenders’ steering committee proposed an alternative plan involving partial loan repayment and securing cash.
In addition to the US lawsuit, BYJU’S has faced regulatory scrutiny in India. Indian authorities recently conducted a raid at BYJU’S offices, seizing documents and digital data. In a letter to employees, Raveendran, the founder of BYJU’S, defended the company, asserting that all overseas acquisitions were conducted through regular banking channels with proper documentation.
The ongoing legal challenges in both the US and India have presented significant obstacles for BYJU’S, raising questions about its financial management and adherence to regulatory guidelines. As the lawsuits progress, the future of BYJU’S and its international operations remains uncertain.
