Byju’s U.S.-based Alpha unit makes Chapter 11 filing in Delaware

By Sarah Lizee

Olympia, Wash., Feb. 1 – BYJU's Alpha, Inc., the U.S. unit of India-based Byju’s (Think & Learn Private Ltd.) made a voluntary Chapter 11 filing in the U.S. Bankruptcy Court for the District of Delaware.

The company listed $500 million to $1 billion in assets and $500 million to $1 billion in liabilities.

Judge John T. Dorsey has been assigned to the case.

As a reminder, an informal group of lenders of Byju’s $1.2 billion of term loans said that administrative agent and collateral agent GLAS Trust Co. LLC filed a petition last week under section 7 of the insolvency and bankruptcy code of India to start corporate insolvency resolution proceedings against the company.

“This action was taken following over 16 months of good faith efforts on behalf of the ad hoc group to restructure the term loans, which, if successful, would have immediately solved for the loan’s numerous outstanding defaults, acceleration, and ended all open litigation while avoiding further enforcement actions,” the group said in a press release.

The lenders said that in November, the Delaware Chancery Court recognized that Byju’s had defaulted on its loan and found that the term loan lenders were within their contractual rights to replace the sole director of Byju’s Alpha, the U.S. subsidiary of Byju’s established in 2021 to receive proceeds of the term loans.

The group said Byju’s has exacerbated its defaults and disregarded its loan obligations post-default, including by refusing to make any contractually required loan payments.

Byju’s Alpha also transferred $533 million in loan proceeds to an obscure, nascent hedge fund and then transferred the ownership of the money to a still undisclosed entity, the group said.

“To date, the former director at Byju’s Alpha, who was appointed by Byju’s, and the management of Byju’s continue to refuse to provide any specific information on the status of such funds to the lenders under the term loans or even the new director of Byju’s Alpha,” the lenders added.

The company also sought to retain a substantial portion of the proceeds from the contemplated sale of Epic!, despite the lenders’ senior secured claims on Epic!’s assets and the clear requirements of the credit agreement, the lenders added.

“It is our belief now that Byju’s management has no intention or ability of honoring its obligations under the term loans,” the group stated.

“That said, we are hopeful that India’s corporate insolvency resolution process will help stabilize Think & Learn and result in implementing a resolution plan that accounts for the interests of all stakeholders.”

Byju’s is an India-based educational technology company. The Byju’s Alpha unit is located in Lewes, Del. Its Chapter 11 case number is 24-10140.

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