Byju's defaults on $40 million loan payment; sues lender Redwood for predatory tactics

Edtech Byju's has decided to not make anymore payments on a $1.2 billion loan and skipped paying $40 million on its due date of 5th June. This, after the startup had a fallout with the lenders and accused them of using predatory tactics.

The company has also filed a case against investment management firm Redwood, challenging the acceleration of a $1.2 billion term loan B (TLB) facility in the New York Supreme Court.

Term loan B (TLB) is a form of term loan financing typically provided by institutional investors.

One more case regarding the default in loan payment is pending in the Delaware court in which Lenders had proposed a takeover of the company's US entity Byju's Alpha.

“Given that legal proceedings are now on foot in both Delaware and New York, it is clear that the entire TLB is disputed,” the company said, referring to the $1.2 billion term loan B. “As such, BYJU’S cannot be expected to and has elected not to make any further payment to the TLB lenders, including any interest, until the dispute is decided by the court.”

Byju's had been trying to restructure the loan after the pandemic era. However, creditors are forcing for an accelerated loan repayment.