Court relief for Byju’s in TLB lenders’ suit

Byju’s won a legal reprieve on Monday when a civil court in Bengaluru declined to grant a plea by its lenders challenging Manipal Group Chairman Ranjan Pai’s acquisition of a 40% stake in the embattled edtech firm’s subsidiary Aakash Institute, two people aware of the development said. The lenders of Byju’s $1.2 billion term loan had moved the city court last Thursday seeking an ex-parte injunction on the transaction allowing Pai to convert a loan of about $250-$300 million he had advanced to the brick-and-mortar coaching network into equity in Aakash Institute. Thursday’s legal challenge by the TLB lenders caught both Byju’s and Pai “by surprise” the sources said.

The lenders were petitioning the court about Pai's conversion of debt into equity at a lower valuation of $600 million compared to the valuation of $950 million ascribed to Aakash Institute when it was acquired by Byju’s parent Think & Learn in 2021. As such, the proposed deal hurts the lenders of Think & Learn, the lenders contended. This lender group controls 80% of the term loan raised by Byju's in November 2021.

According to people present at the hearing on Monday, the court did not grant the injunction to block the deal as per the lenders' plea while also adding that the jurisdiction for the case was not correct. The lenders had cited the credit agreement which they said bars Byju’s parent Think & Learn from selling any asset without prior approval from the lenders, the sources said. Byju’s made its arguments over the weekend at the city civil court, they added.