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Indian edtech giant Byju’s filed a complaint with the New York Supreme Court challenging the acceleration of the $1.2 billion term loan B, calling their demands for prepayment of the entire amount “in the funds,” and sought to disqualify Redwood, which it claims conducted a series of predatory tactics.
The Bengaluru-based startup said Redwood bought a large portfolio of the loan while trading primarily in distressed debt “with the aim of windfall”.
India’s Most Valuable Start-up said it would not make any payments to B’s term loan lenders until the dispute was resolved.
The company said the move from the Indian giant comes after lenders “illegally” accelerated the term of loans on account of “some alleged non-monetary and technical defaults”.
“Against the backdrop of this unreasonable acceleration of TLB, the TLB lenders have taken unwarranted enforcement measures including taking control of Byju’s Alpha and appointing its own management. Not content with this content, the TLB lenders (working through their agent, Inc.) GLAS Trust Company) litigation in Delaware in an effort to give credibility to these actions.
In the Delaware proceedings, the TLB lenders attempted (unsuccessfully) to deny Byju its contractual right to “exclude” lenders primarily involved in opportunistic deals. The Delaware court rejected this attempt, ruling that the TLB lenders “did not prove irreparable harm or balance of damages.” As required to support a provision restricting “this contractual right of Peugeot.”
Byju said he had no choice but to take legal action.
The company has also issued a notice to the Redwood entities, requesting that they be disqualified.
Once this disqualification becomes effective, Redwood will be restricted from exercising significant rights under the TLB. It is important to note that Byju has thus far shown remarkable restraint by refraining from using the disqualification clause, and instead pursued for months an amicable resolution. With the hard-line merchant-lender,” Byju said in a statement.
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