'Litigants have made bewildering claims in US court': Byju's

Edtech major Byju's on Friday said that the Delaware Court has granted an interim order to the company to maintain the status quo in relation to Alpha, a non-operative entity of the company in the US.

Alpha Inc is currently facing a lawsuit in the Delaware court, on behalf of the lenders, who are owed $1.2 billion. Lenders, during the hearing in the court, alleged that Alpha Inc has no employees and the funds worth $500 million were hidden by Byju’s from the lenders of Alpha Inc.

"The litigants have made bewildering claims that Byju's "moved" $500 million from Byju's Alpha, insinuating that these acts were somehow wrongful. This is entirely incorrect. We categorically deny these allegations. The transfers were in full compliance with and did not contravene any terms of the parties' credit agreement and the agreed-upon rights and responsibilities. In fact, even lenders have not alleged that the transfer was not permitted under the parties' existing contractual arrangement," Byju’s said in a statement.

"As Byju's alpha is a non-operative entity, the funds were transferred to other operative entities for growth and expansion in its global operations. BYJU'S entered into the Term Loan B agreement with the clear intention of utilizing the raised funds to drive growth and expansion in its global operations and is free to transfer and use the funds as necessary," it added.

The edtech giant said that Byju's has fulfilled all its contractual payment obligations as agreed in the Term Loan B signed in 2021 and has not missed a single payment there under. "There have been no monetary defaults under the loan. The lenders' allegations (which also we dispute) concern merely insignificant technical and non-monetary defaults. The order does not have any bearing on any other subsidiary of Byju's anywhere in the world. Further, this is a temporary order and the Court has not made any final determination against Byju’s Alpha, including in relation to the transfer," it said.

Notably, the lawsuit was reportedly filed after months of negotiations between creditors and the edtech firm, by Glas Trust Company and Investor Timothy R Poh, Timothy Play and Riju Ravindran. The lawsuit has been filed against the two companies owned by Think and Learn Private Limited, which was founded by Byju Raveendran, according to reports.

"In the face of unrealistic and unacceptable terms being demanded by a collective of lenders engaged primarily in opportunistic trades, we remain steadfast in our pursuit of a fair and equitable resolution through good-faith negotiations. Our unwavering commitment to meeting all our financial obligations is demonstrated by our impeccable track record of consistently honouring timely payments," the edtech firm said.

Last month, the enforcement directorate (ED), the country's law enforcement agency conducted searches at three premises of Byju's founder Byju Raveendran under the provisions of the Foreign Exchange Management Act (FEMA). However, the company said that the visit by officials from the Enforcement Directorate was related to a 'routine inquiry' under FEMA.

In October last year, the company laid off 2,500 employees or 5% of its 50,000-strong workforce. The company said that the decision has been taken as it looks to achieve profitability by March 2023.