The allegation came out at a court hearing on Thursday in Delaware, where Byju’s Alpha faces a lawsuit over who should control the company.
Byju’s Alpha was trying to protect the money from predatory lenders
Photo Credit: Facebook/Byju's
Lenders accused one of India's hottest tech companies, Byju's Alpha, of hiding $500 million (roughly Rs. 4,134 crore) as part of a fight between creditors and the self-proclaimed biggest education technology company in the world.
The allegation came out at a court hearing on Thursday in Delaware, where Byju's Alpha faces a lawsuit over who should control the company. Lenders claim that because of a default earlier this year, they have the right to put their representative, Timothy R. Pohl, in charge.
The dispute is the latest setback for the high-flying startup founded by Byju Raveendran. Byju's had already been working to appease creditors trying to restructure a $1.2 billion (roughly Rs. 99,274 crore) term loan when government investigators searched company offices in April. The Bengaluru-based company has been working toward an initial public offering of its tutoring unit for several years.
Earlier this year, as the two sides were in a standoff, a top manager at Byju's Alpha “admitted to transferring half a billion dollars out of the company,” Brock Czeschin, one of Pohl's lawyers, said during the hearing, which was held by telephone.
Byju's Alpha was trying to protect the money from predatory lenders, Joe Cicero, a lawyer for Byju's Alpha, said during the hearing. The company had a right to transfer the money under the loan agreement, he said.
The company is current on all debt payments and any defaults should be considered technical breaches of the loan agreement, Byju's Alpha attorney Sheron Korpus said in an interview.
Future Trial
Delaware Chancery Court Judge Morgan Zurn did not make any ruling about whether moving the money was appropriate. Zurn did side with lenders by ordering Byju's Alpha managers not to make any substantive changes at the company. The judge scheduled a trial to decide who controls Byju's Alpha later this year.
The lawsuit was filed by Glas Trust Company against Byju's Alpha, its director, Riju Ravindran, and Tangible Play. The two companies being sued are units of Think and Learn Private, the edtech empire founded by Byju Raveendran. Ravindran is also a director of Think and Learn, according to a regulatory filing.
Byju's Alpha is just a holding company that the lenders need to control in order to protect their rights, Czeschin said during the hearing. The lenders are not trying to take over the entire edtech company, he said.
The lenders are distressed debt investors who are wrongly trying to make a profit on the company's debt, Byju's Alpha claimed during the court hearing. The company will get “a large capital infusion” in about two weeks that will allow Byju's Alpha to pay down the $1.2 billion (roughly Rs. 99,274 crore) it owes creditors, Cicero said in court.
The lenders “have engaged in a campaign to harm this business and they don't want to run the company,” Cicero told Zurn.
The case is Glas Trust Company vs Riju Ravindran, 2023-0488, Delaware Chancery Court (Wilmington).
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