(Bloomberg) -- One of India's hottest tech companies, Byju's Alpha, was sued by an agent for lenders owed $1.2 billion after months of negotiations between creditors and the education technology firm.
The lawsuit was filed by Glas Trust Company and investor Timothy R. Pohl against Byju's Alpha, Tangible Play, Inc. and Riju Ravindran. The two companies being sued are units of Think and Learn Private, the edtech empire founded by Byju Raveendran. Ravindran is a director of Think and Learn, according to a regulatory filing.
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It's the latest setback for the once high-flying startup. Byju's had been scrambling to appease creditors on the restructuring of a $1.2 billion term loan before an anti-money laundering probe kicked off in April. The Bengaluru-based company has been working toward an initial public offering of its tutoring unit for several years.
Read more: India's Anti-Money Laundering Agency Searches Byju's Offices
Details about why the case was filed and what Glas Trust and Pohl want have been redacted from court documents. One filing indicates that the lawsuit may be related to a fight over the election of directors, but does not include any specific allegations.
A judge in Wilmington, Delaware — where the lawsuit was filed earlier this month — scheduled a hearing by telephone Thursday to decide whether the case should be expedited.
Delaware Chancery Court Judge Morgan Zurn denied Ravindran's and Byju's request to close Thursday's hearing to the public. “Defendants seek to keep under seal the events at the crux of this case, but have only speculated that harm may result from their disclosure,” Zurn said in a public filing. “Defendants have not met the stringent burden required to deviate from the constitutional mandate that this Court be open to the public.”
Byju's started negotiating its credit agreement after it breached investor protections on the debt by missing a deadline to disclose annual financial results.
Earlier this year, lenders pushed back against a company proposal to rework its debt by increasing the interest rate on the $1.2 billion term loan due 2026. A steering committee of lenders opposed the plan, suggesting that the company instead repay part of the loan and lock up cash, Bloomberg News reported in February.
Last month, regulators in India raided Byju's offices, seizing documents and digital data. Afterward, Raveendran defended the company in a letter to employees, saying the firm had made a number of overseas acquisitions, paying for the transactions through regular banking channels with the appropriate documentation.
The edtech company's founder, Raveendran, and company director Ravindran, did not respond to an email seeking comment. An attorney for Byju's Alpha did not return a call for comment.
The case is Glas Trust Company vs Riju Ravindran, 2023-0488, Delaware Chancery Court (Wilmington).
--With assistance from Jef Feeley and Reshmi Basu.
(Adds government probe in ninth paragraph.)
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