(Bloomberg) — A unit of Byju’s, once one of India’s hottest tech startups, was declared bankrupt by a court-appointed agent in the U.S. after Shell defaulted on a $1.2 billion loan. The company was acquired.
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Byju’s Alpha Inc. doesn’t have enough money to fight with its parent company over debt, according to court documents filed by the unit’s Chief Executive Officer Timothy Pohl. The Chapter 11 petition said lenders were requiring the company to file bankruptcy before they could continue funding Byju’s Alpha.
According to the filing, the company plans to sue a small hedge fund in Florida, which it accuses of wrongfully helping Byju’s parents hide more than $500 million in cash, which it said was owed to creditors. Must go close.
Online-education pioneer Byju’s and its creditors are locked in a prolonged restructuring battle after it breached covenants on a $1.2 billion loan. The company decided not to pay interest on the term loan, which is one of the largest loans given by a startup globally.
The filing marks a turnaround for company founder Byju Raveendran, whose rise from tutor to leader of a company valued at $22 billion has attracted investors. As business boomed during the pandemic, Byju’s went on an acquisition spree to expand globally.
But as schools reopened, the demand for online tuition decreased. The board members have resigned and Raveendran has mortgaged his house as well as houses owned by his family members to raise funds to pay the employees as the company is facing a cash crunch. The company is also selling new stock at a discount of more than 90% to its previous funding round to raise capital.
Bankruptcy rules will allow lenders to borrow funds from Byju’s Alpha, which can be used to continue the fight…