The court observed that the excuse made by Morton was not credible, according to the lenders’ statement.
Published Date – 15 March 2024, 09:16 PM
New Delhi: The Delaware court has rejected Byju’s USD 1.2 billion Term Loan B lenders’ request to impose a mandatory injunction against its group’s US entity seeking a deposit of USD 533 million with the court, Byju’s Alpha counsel said on Friday.
The court, however, has restrained Byju’s from further transferring or using any of the USD 533 million in loan proceeds, purportedly parked at an unknown location, the lenders claimed.
The steering committee of the ad hoc group of term loan lenders of Byju’s USD 1.2 billion term loan B said that the court found that Byju Raveendran and Divya Gokulnath are working in concert with the defendants — Riju Ravindran, Inspilearn LLC, and Camshaft Capital Fund, LP and ordered them to comply with its ruling.
Lenders said that Judge John T Dorsey has ordered the arrest of hedge fund manager William Cameron Morton who worked with Byju’s Alpha for not appearing before the court in the case to explain the location of the fund.
The court observed that the excuse made by Morton was not credible, according to the lenders’ statement.
Think and Learn, Byju’s brand owner, said that the order merely maintains the status quo, because it has always maintained that the said funds are safely parked in one of its subsidiaries and, as per the order, it will rightfully remain there.
“In a hearing presided by the Honourable Judge John T Dorsey of the United States Bankruptcy Court for the District of Delaware, the judge rejected the request made by the alleged debtor in possession and TLB Lenders for a mandatory injunction seeking deposit of the money with the court. Instead, the court granted a preliminary injunction preventing transfers of the funds,” Byju’s counsel said.
Byju’s Term Loan B lenders have approached Delaware court alleging that the edtech firm has transferred the funds given to the company in violation of their contract. It has, however, contested the claim.
The funds were being managed through Byju’s US-based subsidiary Byju’s Alpha.
The legal counsel for Byju’s Alpha admitted that representatives of the lenders of Byju’s TLB had personally verified and certified that the USD 500 million funds were with Byju’s subsidiary as of early 2023.
“We have always maintained that the said funds are safely parked in one of our subsidiaries and, as per the order, it will rightfully remain there. In fact, the court denied the primary relief requested – that a mandatory injunction be granted depositing the monies into court.
“We had also maintained consistently that the lenders last year were aware of the situation of the USD 500 m in Byju’s Alpha. We are satisfied that this matter has been laid to rest,” Byju’s said.
The edtech firm said that the development now makes it clear that “this so-called ad-hoc group” is working in cohorts with certain large investors of Byju’s to exploit the situation and make windfall gains.
“There should be no doubt that we will continue to fight this falsehood for the sake of all our stakeholders, including the millions of students who we proudly serve. This case represents a concerning attempt by a group of opportunistic foreign lenders to exploit an Indian startup by levelling baseless allegations with the sole intent of extracting punitive monetary concessions,” Byju’s said.
The lenders, however, said that the court-ordered freezing of assets is an important step towards recovering the missing USD 533 million.
“We will take all necessary legal actions to recover what we are rightfully owed,” the lenders said.
