Byju’s skips loan repayment

New Delhi Byju’s has skipped payments due on a $1.2 billion loan and instead disqualified the US lender for ‘predatory’ tactics, the education technology startup said on Tuesday.

Byju’s filed a suit against investment management firm Redwood saying the US entity purchased a significant portion of the loan, while primarily trading in distressed debt, which was contrary to the conditions of the term loan facility.

Byju’s, which provides services to more than 150 million students around the world, did not pay $40 million in interest due Monday on the $1.2 billion loan. In a statement, the startup said it has elected not to make further payments on the $1.2 billion so-called term loan B (TLB) and that it filed a suit in the New York Supreme Court. The lenders in March unlawfully accelerated the loan due to certain alleged non-monetary and technical defaults, it said adding that the lenders undertook unwarranted enforcement measures, including seizing control of its US unit – Byju’s Alpha and appointing its management.

Byju’s, which had been trying to strike a deal with creditors to restructure the loan, said it has chosen not to make further payments, including interest until the dispute is decided by the court. After the pandemic-era online tutoring boom tapered, Byju's finances shrunk.

Meanwhile, lenders scrapped long-running negotiations and demanded accelerated repayment. They even sought recovery through the courts.