Byju's Denies Allegations of Hiding $500 Million Funds Controversy in the Edtech Giant's Legal Battle
From Lawsuits to Financial Stability, Inside Byju's Alpha's Fight for Transparency
20 May 2023
Byju's denies allegations of hiding $500 million through its non-operative US entity, Byju's Alpha, stating that the transfers were compliant with the credit agreement.
The company asserts that it has fulfilled all contractual payment obligations and highlights its financial stability with a recent $250 million funding round.
Byju's clarifies that the court's interim order does not affect its other subsidiaries and that the legal battle with lenders is ongoing, with a trial scheduled later this year.
Edtech giant Byju's has found itself embroiled in controversy as it faces allegations of hiding $500 million through its non-operative US entity, Byju's Alpha. However, the company firmly denies these claims, calling them bewildering and asserting that the transfers fully complied with the parties' credit agreement. This dispute came to light during a court hearing in Delaware, where Byju's Alpha is entangled in a lawsuit over control of the company. In this blog post, we will delve into the details of the allegations and Byju's response, shedding light on the ongoing legal battle.
Byju's Alpha, the non-operative US entity, received a term loan B, and the funds were subsequently transferred to other operative entities for the purpose of global expansion. Byju's emphasizes that these transfers were carried out in adherence to the agreed-upon terms and responsibilities outlined in the credit agreement. The company asserts that not only were the transfers permitted under the existing contractual arrangement, but the lenders themselves did not allege any breach of transfer permissions.
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Byju's clarifies that it has diligently met all contractual payment obligations as stipulated in the term loan B agreement signed in 2021. The company highlights its commitment to financial stability, reinforcing this with the recent successful completion of a $250 million funding round. Byju's aims to dispel any concerns regarding its financial integrity and underscore its dedication to driving growth and expansion through the utilization of raised funds.
The court's interim order, which prevented substantive changes at Byju's Alpha, is described as temporary and without final determination. Byju's emphasizes that the order has no bearing on its other subsidiaries worldwide. This assertion seeks to reassure stakeholders that the legal proceedings surrounding Byju's Alpha will not impact the operations of other entities within Byju's ecosystem.
Lenders have accused Byju's Alpha of hiding or moving $500 million, asserting their right to put their representative in charge due to a default earlier this year. Byju's Alpha claims that it transferred the funds to protect them from predatory lenders and that it had the right to do so under the loan agreement. The company dismisses the lenders' allegations as insignificant technical breaches and non-monetary defaults.
With a trial scheduled later this year, the legal battle between Byju's Alpha and its lenders is far from over. Byju's Alpha's legal team contends that the lenders are attempting to profit from the company's debt and not seeking full control of the edtech giant. Byju's Alpha expects a significant capital infusion in the coming weeks, which it plans to utilize for paying down its debt obligations.