Alpha Inc, a US unit of Byju’s, once one of India’s most valued edtech startups, was put into bankruptcy in the US by a court-appointed agent who took over the shell company after it defaulted on $1.2 billion in debt, on February 2, as reported by Bloomberg.
Byju’s Alpha Inc. doesn’t have enough money to keep fighting with its parent company about the debt, according to court papers filed by the unit’s Chief Executive Officer Timothy Pohl. The lenders required the company to file bankruptcy before they would continue funding Byju’s Alpha, the Chapter 11 petition said, as per the report.
The company plans to sue a small hedge fund in Florida it has accused of wrongfully helping Byju’s parent hide more than $500 million in cash that should go to creditors, according to the filing.
Byju’s Alpha listed assets of at least $500 million and liabilities of at least $1 billion in its bankruptcy petition. A lawyer for the parent of Byju’s Alpha didn’t return an email requesting comment.
Lenders to Byju’s won a court fight in Delaware late last year that allowed them to appoint a new director — Pohl — to the financing unit. Since then, the lenders and Byju’s parent company have traded accusations in courts in Delaware and Florida, where the battle over the debt default has been carried out.
Last month, the lenders filed an insolvency petition in India.
The US bankruptcy case is BYJU’s Alpha, Inc., 24-10140, US Bankruptcy Court District of Delaware (Wilmington), the report further added.
This development comes right after several large shareholders of Think and Learn Pvt. Ltd., the parent entity of edtech startup Byju’s, called for a change in the company’s management, including the removal of co-founder and chief executive Byju Raveendran, as reported by Mint on February 1.
General Atlantic, Prosus Ventures, Peak XV and Chan Zuckerberg Initiative, among others, signed a notice on February 1 calling for an extraordinary general meeting also to propose a reconstitution of the beleaguered company’s board, the report added.
Byju’s on January 29 announced that they would raise $200 million through a rights issue of shares to clear “immediate liabilities” and for other operational costs.
