Now, NCLT Admits Insolvency Plea Of Its Term Loan B Lenders

SUMMARY

The case was filed by Glas Trust Company, the administrative agent for the majority of BYJU’S $1.2 Bn Term Loan B lenders

The plea was admitted a month after a clutch of lenders filed it on January 22

This is the fourth such insolvency petition filed against BYJU’S in the past six months

Adding to the long list of insolvency petitions against BYJU’S, the National Company Law Tribunal (NCLT) on Wednesday (February 21) admitted the insolvency plea filed by the edtech major’s creditors.

As per the information available on the NCLT website, the case filed by Glas Trust Company was registered earlier in the day. Glas Trust 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.

The plea was admitted a month after the lenders filed it on January 22. This is the fourth such insolvency petition filed against the beleaguered edtech giant in the past six months.

BYJU’S, in a statement released after the petition was filed, had termed any proceedings by lenders before the NCLT premature and baseless.

“As we have stated before, the validity of lenders’ actions, including acceleration of the term loan, is pending and under challenge in several proceedings, including before the New York Supreme Court,” the edtech company said on January 22.

At the heart of the saga is the $1.2 Bn TLB raised by the company in 2021. Later, 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.

Afterwards, the lenders also sought a prepayment of $200 Mn, along with a higher interest rate, as a precondition to restructure the TLB. Eventually, BYJU’S stopped making further payments towards its TLB, including the interest amount.

Following this, the lenders moved the NCLT. 

This adds to a long list of troubles for BYJU’S. It is also facing separate insolvency proceedings from the Board of Control for Cricket in India (BCCI), France-based Teleperformance Business Services, and IT firm Surfer Technologies.

It is pertinent to note that the NCLT has issued notice in all the insolvency petitions filed against the edtech major.

Meanwhile, a full blown legal battle erupted between promoters of BYJU’S and its investors on Wednesday ahead of the upcoming EGM. The company got a temporary relief as the Karnataka HC said that any decisions taken by shareholders at the EGM will not come into effect till March 13, the next date of hearing.

Earlier in the day, founder and CEO Byju Raveendran, in a letter to shareholders, said that the rights issue to raise $200 Mn, at a 99% valuation cut, has been fully subscribed. 

BYJU’S has been grappling with a slew of challenges for the last year or so, including mass layoffs, a looming debt crisis, delay in filing financial statements, and growing losses. 

The edtech startup’s consolidated net loss surged 81% year-on-year (YoY) to INR 8,245.2 Cr in FY22, while operating revenue soared 120% YoY to INR 5,014.6 Cr during the year under review.