A politician in Byju’s home country was taken aback by a US court order that forced units connected to the Indian education technology company into bankruptcy.
According to court documents, the ruling, which was issued at a hearing on Tuesday in Delaware, will cause entities including Neuron Fuel Inc., Epic! Creations Inc., and Tangible Play Inc. to file for involuntary Chapter 11 bankruptcy. After the units neglected to provide creditors with the information they were asked to, an order was issued as a default judgment.
In a letter sent after the ruling, Pankaj Srivastava described the development as “surprising” and “in conflict” with Indian insolvency procedures. Srivastava, who was hired this year to serve as Byju’s interim resolution specialist, is asking for the bankruptcy’s effects to be postponed.
The petition was launched in June by the creditors, who were led by HPS Investment Partners. They claimed that Byju Raveendran, the creator of the company, had broken their loan agreements by withholding information regarding the three divisions’ finances. Lenders requested that an independent Chapter 11 trustee be appointed to oversee the Byju units in bankruptcy, and Judge Brendan Shannon granted their request.
Byju’s, which was once estimated to be worth $22 billion and represented India’s technological aspirations, is involved in more than six bankruptcy lawsuits both domestically and internationally. The Covid-19 pandemic helped the company’s income, but as classes began, there was a cash constraint. For reimbursements, creditors have filed lawsuits in the US and India.
Epic disagreed with the forced bankruptcy, as did the other Byju entities. They alleged the filings were an unlawful “tactical maneuver” intended to gain an advantage over the Byju entities in related litigation and asserted in a September court filing that the lenders lacked legal standing to file for bankruptcy.
Citing Indian insolvency legislation, Srivastava said, “The Resolution Professional has the duty to take control of the corporate debtor’s assets.” Court documents revealed that he did not show up for the hearing.
In the convoluted international bankruptcy proceedings, there has been disagreement between the Indian official and the US creditors. Srivastava decided to withdraw US lenders to Byju’s from a powerful Indian creditors committee.
It is uncertain if the Indian official’s request will cause the decision to be altered. The petitioning creditors for Byju stated that they “disagree with the letter” and requested that the judge approve the order in order for the bankruptcy to go into force. They also mentioned that the letter was informal. There has been no public announcement of a judge’s signed order as of Friday at noon.
Byju’s bankruptcy ruling in US comes as a surprise for Indian official | Company News
