Byju's faces unit takeover by lenders following $1.2 billion loan default

Byju's, a prominent player in the Indian ed-tech sector, is grappling with the takeover of one of its units by lenders after a default on a $1.2 billion loan. Lenders, including Redwood Investments LLC and Silver Point Capital LP, exercised their contractual rights to assume control of Byju's Alpha, a special-purpose entity formed for financing, citing the company's default. The Delaware Chancery Court Judge, Morgan Zurn, ruled in favor of the lenders, dismissing Byju's complaint that questioned the legitimacy of Timothy Pohl, the lenders' nominee, taking over as the sole director of Byju's Alpha.

As the lenders intensify efforts to recover the $1.2 billion loan, Byju's has been facing financial distress following the decline of the pandemic-era boom in online learning. The company had been working to address the loan issue and sell assets when government investigators conducted searches at its offices. The lender dispute has led some investors to devalue their stakes in Byju's, one of the world's largest ed-tech companies. 

Byju's Alpha was originally established as a holding company to safeguard the lenders' interests, according to a lawyer for the lenders. Byju's, based in Bengaluru, India, has not yet responded to requests for comment.