Foreign Creditor Urges NCLT to Stop Byju's from Transferring Shares

In a major development for India's edtech sector, Byju's, the leading online learning platform, faces legal action from a US-based lender consortium over a defaulted loan. Glas Trust LLC, representing over 100 lenders, has filed a petition with the National Company Law Tribunal (NCLT) in Bangalore to restrict Byju's parent company, Think & Learn Pvt Ltd, from selling, pledging, or transferring its shares.

Loan Default and Accusations of Financial Mismanagement

The petition stems from Byju's alleged default on a significant loan exceeding Rs 8,000 crore (approximately $1.2 billion). Glas Trust, through legal firm Khaitan & Co, claims Byju's began defaulting in 2022 and has admitted to it.

Udaya Holla, representing Glas Trust, raised concerns about Byju's ongoing financial maneuvers. He alleges the company is taking on new debt while using its shares as collateral, potentially jeopardizing creditor interests. Highlighting the seriousness of the situation, Holla pointed to the multiple insolvency petitions against Byju's pending before the NCLT.

Byju's Response and Next Steps

Byju's, represented by Dhyan Chinappa, requested more time to address the allegations. Chinappa contested the lack of concrete evidence and argued that the plea sought relief without a proper opportunity for response.

The NCLT granted Byju's request, scheduling the next hearing for June 10th.

Settlement Efforts and Potential Impact

Byju's is reportedly engaged in negotiations to settle debts with other creditors. The company has previously sought time to reach settlements with service providers Teleperformance Business Services and Surfer Technologies. The NCLT has set a deadline of June 26th for Byju's to file a joint settlement memo with both entities.

This legal battle highlights Byju's financial challenges and the international scope of its financial obligations. The outcome could significantly impact the edtech giant's operations and financial strategies, especially considering the multiple insolvency petitions pending.

Industry and Regulatory Implications

The case has drawn significant attention from stakeholders in the edtech industry and financial markets. It not only tests Byju's financial resilience but also raises critical questions about corporate financial practices and regulations in India. The coming weeks will be crucial as the NCLT case unfolds, potentially setting a precedent for the edtech sector and beyond.

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