Byju’s has filed a complaint against US-based Redwood to challenge the acceleration of its $1.2 billion Term Loan B (TLB) in the New York Supreme Court. Additionally, the edtech major wants to disqualify the investment management firm, which according to Byju’s has violated the terms of the TLB and purchased a significant portion of the loan while primarily trading in distressed debt. 

The edtech decacorn has also accused the investment firm of leading a group of lenders to play predatory tactics against it. Additionally, the start-up has claimed that the TLB lenders attempted to deprive the company of its contractual right to ‘disqualify’ them engaged in opportunistic trades.

“On 3 March 2023, the TLB lenders unlawfully accelerated the TLB on account of certain alleged non-monetary and technical defaults. On the back of this unconscionable acceleration of the TLB, the TLB lenders undertook unwarranted enforcement measures, including seizing control of BYJU’S Alpha and appointing its own management. Not resting content with this, the TLB lenders (acting through their agent, GLAS Trust Company) commenced litigation in Delaware in an attempt to lend credence to these actions,” it added in the statement. 

On June 5, the global news agency Bloomberg reported that Byju’s would face a deadline to repay $40 million of the $1.2 billion loan. However, after this development, it is evident that the company is not going to make any further payments. 

“Given that legal proceedings are now on foot in both Delaware and New York, it is clear that the entire TLB is disputed. As such, Byju’S cannot be expected to and has elected not to make any further payment to the TLB lenders, including any interest, until the dispute is decided by the court,” it stated. 

The troubled edtech firm had been in talks with the investors to restructure its $1.2 billion loan. It offered a 200-300 basis point hike in the interest rate. Agreeing partially to its terms, the lenders asked the company to pre-pay $200 million with higher interest rates. 

However, all the negotiations went in vain as the lenders decided to scrap the talks recently after one of the lenders sued the firm in the Delaware court with the allegation of hiding $500 million, which the company raised in a funding round.