Byju's Lenders Kick Off Bankruptcy Proceedings Against US Units Epic, Osmo

Byju's lenders in the US have filed bankruptcy petitions against the beleaguered edtech's assets in the country, which include its acquisitions of Epic, Tynker and Osmo. The edtech owes them $1.4 billion.

Certain holders of the term loans and Glas Trust Co., which is the administrative agent of the loans, have filed petitions under the US Bankruptcy Code to initiate involuntary Chapter 11 proceedings against digital reading platform Epic!, coding for kids platform Tynker operator Neuron Fuel, and educational games platform Osmo operator Tangible Play, according to a statement.

The three units are US-based guarantors of the term loans.

The lenders said it is clear that Byju's management has "no intention or ability" to repay its loans.

"Byju's founders, who also serve as the three directors of the overall enterprise—Byju Raveendran, Riju Raveendran, and Divya Gokulnath—unlawfully diverted $533 million in loan proceeds, the whereabouts of which are still unknown," they said.

The lenders said that due to Byju's failed leadership and mismanagement, they have taken this action to "preserve the value of Epic!, Neuron Fuel, and Tangible Play."

"We remain committed... and stand ready to infuse the capital necessary to reorganise the businesses. Under the supervision of the court, the lenders hope that Epic!, Neuron Fuel, and Tangible Play will benefit from much-needed oversight while a plan is developed to maximise the value of these assets for the benefit of all stakeholders."

The battle between the lenders and Byju's has been ongoing since 2022, shortly after Byju's Alpha Inc. was established as a US subsidiary of Byju's to receive the proceeds of the term loans. It defaulted on the lenders' term loan in 2022 when it failed to provide required unaudited quarterly financial information on time.

Since then, after months of unsuccessful attempts at negotiation, lenders have turned up the heat against Byju's, accelerating the term loans, taking control of the pledged equity in Byju's Alpha, replacing Riju Raveendran with a restructuring professional, and dragging Byju's to the Bengaluru bench of the NCLT.