Indian edtech giant Byju’s filed a complaint in the New York Supreme Court to challenge the acceleration of the $1.2 billion term loan B, calling their demands for prepayment of the entire amount “high-handed” and seeking to disqualify investment management firm Redwood for predatory tactics.
The Bengaluru startup said Redwood bought a large loan portfolio while trading in distressed debt “with the intent of making windfall gains.” Byju took the loan in late 2021 to fund its rapid growth without diminishing shareholders’ equity.
India’s most valuable startup would not pay or interest term loan B lenders until settled.
On Tuesday, Byju’s said lenders “unlawfully” accelerated loan terms due to “certain alleged non-monetary and technical defaults.”
“On the back of this excessive acceleration of the TLB, the TLB lenders took unwarranted enforcement measures, including seizing control of Byju’s Alpha and appointing its management. “Not content with this, the TLB lenders (acting through their agent, GLAS Trust Company) commenced litigation in Delaware to lend credence to these actions,” Biju’s said Tuesday.
“In Delaware proceedings, the TLB lenders unsuccessfully attempted to deprive Byju’s of its contractual right to ‘disqualify’ lenders engaged in opportunistic trades. As a result, the Delaware court ruled that the TLB lenders “have not demonstrated either irreparable harm or the balance of the harms as required to support a provision restraining” Byju’s contractual entitlement.
Byju’s said it had to sue. The business also wants the Redwood entities disqualified.
Redwood would lose important TLB rights after disqualification. It is crucial to highlight that Byju’s has thus far exhibited great control by refraining from using the exclusion clause, instead attempting for months to seek an amicable conclusion with the hawkish trader-lender,” Byju’s said.
