Lenders accused Byju’s spokesperson, the CEO of one of the companies, of attempting to conceal $500 million in a dispute between lenders and the world’s largest education technology company.
The allegation was made during a court hearing in Delaware on Thursday, where Byju’s figurehead is suing over who should control the company. Lenders argue that because of a default earlier this year, they have the authority to appoint their representative, Timothy R. Pohl.
The lawsuit is the latest setback for Byju Raveendran’s high-flying startup. When government investigators searched the company offices in April, Byju’s had already been working to appease creditors who were attempting to restructure a $1.2 billion term loan.
The Bengaluru-based company has been preparing for an initial public offering of its tutoring unit for several years.
Earlier this year, while the two sides were at odds, during the telephone hearing, a top manager at Byju’s figurehead “admitted to transferring half a billion dollars out of the company,” according to Brock Czeschin, one of Pohl’s lawyers.
During the hearing, Joe Cicero, a lawyer for Byju’s figurehead, stated that the figurehead was attempting to protect the money from predatory lenders. He said the company had the right to transfer the funds under the loan agreement.
According to Byju’s figurehead attorney, Sheron Korpus, the company is current on all debt payments, and any defaults should be considered technical breaches of the loan agreement.
Glas Trust Company filed the lawsuit against Byju’s figurehead, its director, Riju Ravindran, and Tangible Play Inc.
The two companies being sued are divisions of Think and Learn Private, the tech empire founded by Byju Raveendran. According to regulatory filings, Ravindran is also a director of Think and Learn.
Czeschin stated during the hearing that Byju’s figurehead is simply a holding company that the lenders must control in order to protect their rights. He claims that the lenders are not attempting to take over the entire tech company.
During the court hearing, Byju’s figurehead claimed that the lenders are distressed debt investors who are wrongfully attempting to profit from the company’s debt.
Cicero stated in court that the company will receive a “large capital infusion” in about two weeks, allowing Byju’s figurehead to repay the $1.2 billion owed to creditors.
Cicero told Zurn that the lenders “have engaged in a campaign to harm this business, and they don’t want to run the company.”
