Insolvency Plea Registered Against Byju’s by US-based Glas Trust Company LLC
On February 21, US-based non-bank loan agency Glas Trust Company LLC lodged an insolvency plea against ed tech giant Byju’s at the National Company Law Tribunal (NCLT) in Bengaluru. This marks the fourth insolvency plea filed against Byju’s in less than six months, underscoring mounting financial challenges for the educational technology company.
Glas Trust serves as the administrative and collateral agent for foreign lenders, who collectively provided over 85 percent of Byju’s $1.2-billion term loan. The insolvency plea reflects escalating concerns among lenders regarding Byju’s financial viability. This development comes after Moneycontrol’s January 25 report revealing the initiation of insolvency proceedings by foreign lenders against Byju’s.
Responding to the insolvency plea, Byju’s emphasized that any proceedings before the NCLT by lenders are premature and baseless. Byju’s reiterated its stance that the validity of lenders’ actions, including loan acceleration, remains under challenge in various legal proceedings, including before the New York Supreme Court. The company also highlighted the lenders’ actions’ timing, coinciding with Byju’s commencement of a rights issue.
Also Read: SEBI Uncovers $240 Million Discrepancy in Zee Entertainment’s Accounts
In a shareholder letter, Byju’s founder and CEO, Byju Raveendran, announced the successful closure of the company’s rights issue, raising $200 million at a valuation cut of 99 percent. Despite this fundraising success, Byju’s faces ongoing legal challenges, with multiple entities filing insolvency pleas against the company.
Notably, other organizations, including the Board of Control for Cricket in India (BCCI), France-based Teleperformance Business Services, and digital marketing firm Surfer Technologies, have separately filed insolvency pleas against Byju’s. The NCLT has issued notices in all insolvency petitions against the ed tech giant.
While BCCI’s petition is scheduled for a hearing on February 28, Surfer’s and Teleperformance’s pleas are expected to be heard in March 2024. BCCI contends that Byju’s owes them over Rs 150 crore, while Surfer and Teleperformance claim amounts of Rs 4 crore and Rs 2.3 crore, respectively.
These legal battles and financial woes pose significant challenges for Byju’s as it navigates a complex landscape of insolvency proceedings and attempts to maintain its market position amidst intensifying competition in the educational technology sector.
