4 september 2024 : US lenders to Byju’s have been removed from a key creditors committee by a court-appointed arbitrator in India, a move that could benefit the online-education company as it tries to avoid bankruptcy.
This ruling, made by the official overseeing Byju’s insolvency case, means these lenders, represented by investment firm Glas Trust, will no longer influence decisions about the company’s leadership or restructuring plan.
The removal is a blow to the lenders, who are seeking to recover over $1.2 billion from Byju’s. Glas Trust has been a strong opponent of a settlement agreement between Byju’s and an Indian creditor—the country’s cricket governing body—aimed at resolving insolvency. Glas Trust has challenged this agreement, claiming it should be paid first. The arbitrator’s decision may allow the settlement to move forward.
The lenders have criticized Byju’s Interim Resolution Professional, Pankaj Srivastava, for allegedly excluding them from voting on the company’s leadership and manipulating the creditors’ vote. They accuse Srivastava of trying to undermine their claims and orchestrating the creditors committee’s decision without their involvement.
The lenders have faced challenges in pushing Byju’s into insolvency proceedings in India, with some aspects of the case now before the Supreme Court of India. In the US, they are also pursuing $533 million allegedly hidden by Byju’s founder, Byju Raveendran.
Byju’s is dealing with a fraudulent transfer lawsuit in a US bankruptcy court related to Byju’s Alpha, a shell company. The lenders have seized control of this company and are suing to recover the $533 million. In India, Byju’s had reached a deal to resolve the primary insolvency case with the cricket governing body, but the lenders have requested the Supreme Court block this deal, arguing that funds should be used to settle their claims. The court has yet to rule on this appeal.
