• Wed. Feb 28th, 2024

Baiju’s case against ‘predatory’ lenders | TechCrunch

Baiju’s case against ‘predatory’ lenders |  TechCrunch

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Indian edtech giant Byjus challenged the acceleration of its $1.2 billion Term Loan B in the New York Supreme Court, calling its demands to pay the full amount upfront “high-handed” and seeking to disqualify Redwood. A series of predatory tactics were carried out.

The Bengaluru-based startup said it bought a significant portfolio of Redwood loans while trading primarily in distressed debt.

India’s most valuable startup has said it will not pay term loan B lenders until the dispute is resolved.

The move from the Indian giant comes after the company said it “illegally” accelerated the maturity of loans on account of “certain non-monetary and technical lapses”.

“Following this unconscionable acceleration by TLB, TLB lenders took unnecessary enforcement actions, including seizing control of Baiju’s Alpha and appointing their own management. “Not satisfied with this, the TLB lenders (acting through their agent, GLAS Trust Company) have commenced litigation in Delaware in an attempt to give credence to these actions,” Byjus said Tuesday.

“In the Delaware proceedings, the TLB lenders sought (unsuccessfully) to forfeit Baiju’s contractual right, essentially the right to disqualify borrowers engaged in opportunistic trades. A Delaware court rejected this effort, ruling that the TLB lenders “have not demonstrated a balance of harm or irreparable harm sufficient to support a provision barring Baiju’s right under this contract.”

Baijus said there was no option but to take legal action.

The company has issued notices to the Redwood firms seeking disqualification.

“Once such disqualification takes effect, Redwood will be prevented from exercising critical rights under the TLB. “It is important to note that Byjus has so far shown remarkable restraint by refraining from using the disqualification clause, instead trying for months to reach an amicable settlement with the hawkish merchant-lenders,” Byjus said in a statement.

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