The Busy Brains
7 Jun 2023
Indian edtech giant Byju's files a case against investment firm Redwood in the New York Supreme Court, challenging the acceleration of a $1.2 billion term loan facility and accusing Redwood of predatory tactics. Learn more about the legal dispute and its implications.
Indian edtech giant, Byju's, known for its recent valuation cut by BlackRock, has taken legal action against investment management firm Redwood in the New York Supreme Court. Byju's aims to contest the acceleration of a $1.2 billion term loan B facility and disqualify Redwood as a lender due to alleged predatory tactics.
Byju's alleges that Redwood, along with a group of lenders, engaged in predatory tactics against the edtech company. By purchasing a substantial portion of the loan while primarily dealing in distressed debt, Redwood's actions are claimed to violate the conditions set forth by the term loan facility.
In response, Byju's has issued a notice to disqualify Redwood entities as lenders with critical rights under the term loan regulations once it becomes effective. The company emphasizes that the acceleration of the term loan by the lenders on March 3, 2023, due to alleged non-monetary and technical defaults, was unlawful. Byju's further asserts that the lenders took unwarranted enforcement measures, including seizing control of BYJU'S Alpha and appointing their own management. Additionally, the lenders initiated litigation in Delaware to support their actions, as stated by Byju's.
This recent development follows Byju's failure to meet the $40 million loan repayment deadline, which occurred on Monday. As a result, Byju's has declared that it will withhold any further payments to the term B loan providers, including interest, until the resolution of the case.
Byju's determination to challenge Redwood's alleged predatory tactics in the New York Supreme Court reflects the edtech giant's commitment to protecting its interests and contesting what it deems to be an unconscionable acceleration of the term loan. The outcome of this legal dispute will have significant implications for both parties involved and the broader edtech industry.