Education firm Byju’s decided not to make additional loan payments totaling $1.2 billion after a disagreement with lenders escalated into a dispute that may endanger the survival of one of India’s most successful startups.
People with knowledge of the situation claim that Byju’s failed to pay the $40 million in interest that was scheduled to be paid on Monday. The firm announced in a statement on June 6 that it had complained to the New York Supreme Court over the loan.
The business claimed, referring to the $1.2 billion term loan B, that “it is clear that the entire TLB is disputed given that legal proceedings are now ongoing in both Delaware and New York.
“As a result, BYJU’S cannot be expected to has elected not to make any further payment to the TLB lenders, including any interest, until the controversy is resolved by the court,” the statement reads.
After the online tutoring boom of the pandemic era peaked and Byju’s finances were strained, the company had been attempting to reach an agreement with creditors to restructure the debt.
The protracted negotiations were abandoned, however, as creditors demanded an accelerated payback. According to the people, who wished to remain anonymous since the situation is private, the payment had not been made as of 6 p.m.
According to the person, several lenders are looking into ideas for how to handle a prospective payment default. On Monday, the loan fell to a low of 64.375 cents for every dollar, down from 78 cents on June 2, according to data compiled by Bloomberg.