Byju’s Alpha was sued by an agent for lenders owed $1.2 billion after months of negotiations between creditors and the education technology firm, Bloomberg reported on Thursday.
The report further added that Glas Trust Company and investor Timothy R. Pohl filed the action against Byju’s Alpha, Tangible Play, Inc., and Riju Ravindran.
Think and Learn Private, which is the ed-tech giant founded by Byju Raveendran, is suing the two firms. The regulatory filing noted that Ravindran is a director of Think and Learn.
Court filings have been redacted with details on why the complaint was brought and what does Glas Trust and Pohl want. The report mentioned that one filing suggests that the case may be in connection to a fight over the election of directors, although it does not include specific charges.
According to the Bloomberg report, a judge in Wilmington, Delaware, scheduled a telephone hearing for Thursday to decide whether to expedite the case. The lawsuit was reportedly filed there earlier this month.
The report mentioned that Ravindran’s and Byju’s request to close Thursday’s hearing to the public was denied by Delaware Chancery Court Judge Morgan Zurn.
As quoted by Bloomberg report, Zurn said in a public filing: “Defendants seek to keep under seal the events at the crux of this case, but have only speculated that harm may result from their disclosure.”
“Defendants have not met the stringent burden required to deviate from the constitutional mandate that this Court be open to the public,” Zurn added.
Byju’s reportedly sought more time from lenders earlier this year to restructure an arrangement regulating a $1.2 billion loan that is in breach of covenants, media reports stated citing sources.
According to those familiar with the case, the lenders objected to the company’s request to restructure its debt by raising the interest rate on the $1.2 billion term loan due in 2026.
Before an anti-money laundering investigation began in April, Byju’s was scrambling to please creditors on the refinancing of the loan.
Recently, two people familiar with knowledge told TechCrunch that Byju’s raised $250 million in fresh funding and is close to securing an additional $700 million.
The people said on condition of anonymity that the New York-headquartered investment firm Davidson Kempner has invested $250 million in Byju’s via structured instruments.
So far, Byju’s founder, Raveendran, and company director Ravindran did not respond.
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