TLB Lenders Urge NCLT To Restrain BYJU’S From Selling Shares

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SUMMARY

The creditors argued that BYJU’S was borrowing more money and alienating its shares in exchange, “causing grave prejudice” to the creditors

Citing 10 insolvency petitions against BYJU’S before NCLT and its financial condition, the lenders urged the NCLT to pass an immediate stay order to “protect their interests”

The issue stems from the edtech’s $1.2 Bn TLB raised in 2021, which BYJU’S stopped repaying last year

In yet another update at BYJU’S, the US-based creditors of the troubled edtech giant have sought directions from the National Company Law Tribunal (NCLT) to restrain the company from pledging, selling or transferring shares.

As per Moneycontrol, the lenders told the tribunal during a hearing on Wednesday (May 29) that BYJU’S was borrowing more money and alienating its shares in exchange. This, they said, was “causing grave prejudice” to the creditors. 

It is pertinent to note that the US-based lenders of the edtech major have filed an insolvency petition before the NCLT via a US-based non-bank loan agency Glas Trust Company. The developments came to pass during the hearing of the same plea. 

As per the report, they also alleged that the company’s founder and CEO Byju Raveendran had borrowed INR 350 Cr in exchange for some of his shares despite creditors filing the insolvency plea in February this year. 

Since Byju was based in Dubai, they would be left with no one to prosecute and recover the money from if he continued borrowing money in exchange for shares, the lender reportedly argued. 

Urging the NCLT to pass an immediate stay order to “protect their interests”, the creditors also contended that close to 10 insolvency petitions against the edtech major before the Bengaluru bench of the NCLT “spoke of the company’s financial condition”.

In retort, the counsel for BYJU’S argued that the company needed time to file a response to the petition. The troubled edtech further contended that the allegations made by the creditors were unsubstantiated and were made without giving BYJU’S and its promoter an opportunity to respond.

The matter will next be reportedly heard by NCLT on June 10. 

This comes three months after the tribunal admitted the insolvency plea filed by the edtech major’s creditors. The case has been filed by Glas Trust Company, which is the administrative agent for a majority of BYJU’S $1.2 Bn Term Loan B (TLB) lenders. 

The US-based non-bank loan agency represents foreign creditors who have extended 85% of the TLB.

For the uninitiated, the edtech major raised a $1.2 Bn TLB in 2021. But, as funding winter and macroeconomic pressures reigned supreme around 2022 and 2023, the creditors asked BYJU’S to immediately repay a part of the loan during the renegotiations for the terms of the debt.

The creditors also sought a prepayment of $200 Mn with a higher rate of interest rate, as a precondition to restructure the TLB. Later on, the edtech major altogether stopped making further payments towards its TLB, including the interest amount.

This prompted the lenders to also undertake a bankruptcy process in a US court and then before the NCLT as well. 





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TLB Lenders Urge NCLT To Restrain BYJU’S From Selling Shares


SUMMARY

The creditors argued that BYJU’S was borrowing more money and alienating its shares in exchange, “causing grave prejudice” to the creditors

Citing 10 insolvency petitions against BYJU’S before NCLT and its financial condition, the lenders urged the NCLT to pass an immediate stay order to “protect their interests”

The issue stems from the edtech’s $1.2 Bn TLB raised in 2021, which BYJU’S stopped repaying last year

In yet another update at BYJU’S, the US-based creditors of the troubled edtech giant have sought directions from the National Company Law Tribunal (NCLT) to restrain the company from pledging, selling or transferring shares.

As per Moneycontrol, the lenders told the tribunal during a hearing on Wednesday (May 29) that BYJU’S was borrowing more money and alienating its shares in exchange. This, they said, was “causing grave prejudice” to the creditors. 

It is pertinent to note that the US-based lenders of the edtech major have filed an insolvency petition before the NCLT via a US-based non-bank loan agency Glas Trust Company. The developments came to pass during the hearing of the same plea. 

As per the report, they also alleged that the company’s founder and CEO Byju Raveendran had borrowed INR 350 Cr in exchange for some of his shares despite creditors filing the insolvency plea in February this year. 

Since Byju was based in Dubai, they would be left with no one to prosecute and recover the money from if he continued borrowing money in exchange for shares, the lender reportedly argued. 

Urging the NCLT to pass an immediate stay order to “protect their interests”, the creditors also contended that close to 10 insolvency petitions against the edtech major before the Bengaluru bench of the NCLT “spoke of the company’s financial condition”.

In retort, the counsel for BYJU’S argued that the company needed time to file a response to the petition. The troubled edtech further contended that the allegations made by the creditors were unsubstantiated and were made without giving BYJU’S and its promoter an opportunity to respond.

The matter will next be reportedly heard by NCLT on June 10. 

This comes three months after the tribunal admitted the insolvency plea filed by the edtech major’s creditors. The case has been filed by Glas Trust Company, which is the administrative agent for a majority of BYJU’S $1.2 Bn Term Loan B (TLB) lenders. 

The US-based non-bank loan agency represents foreign creditors who have extended 85% of the TLB.

For the uninitiated, the edtech major raised a $1.2 Bn TLB in 2021. But, as funding winter and macroeconomic pressures reigned supreme around 2022 and 2023, the creditors asked BYJU’S to immediately repay a part of the loan during the renegotiations for the terms of the debt.

The creditors also sought a prepayment of $200 Mn with a higher rate of interest rate, as a precondition to restructure the TLB. Later on, the edtech major altogether stopped making further payments towards its TLB, including the interest amount.

This prompted the lenders to also undertake a bankruptcy process in a US court and then before the NCLT as well. 





Source link

Disclaimer

We strive to uphold the highest ethical standards in all of our reporting and coverage. We StartupNews.fyi want to be transparent with our readers about any potential conflicts of interest that may arise in our work. It’s possible that some of the investors we feature may have connections to other businesses, including competitors or companies we write about. However, we want to assure our readers that this will not have any impact on the integrity or impartiality of our reporting. We are committed to delivering accurate, unbiased news and information to our audience, and we will continue to uphold our ethics and principles in all of our work. Thank you for your trust and support.

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