Byju’s Alpha seeks $260 million DIP loan; hopes to claw back $533 million via lawsuit

By Sarah Lizee

Olympia, Wash., Feb. 2 – Byju's Alpha, Inc. is seeking approval of a $260 million two-year debtor-in-possession financing package, $20 million of which would be new money, with existing lenders and GLAS Trust Co. LLC as agent, according to a motion filed Friday with the U.S. Bankruptcy Court for the District of Delaware.

Timothy R. Pohl, Byju’s Alpha’s director and chief executive officer, said in court documents that the company has also filed a lawsuit that seeks to recover $533 million in prebankruptcy transfers.

Pohl became the director and CEO of the debtor after Byju's Alpha and its former parent company, India-based Byju’s (Think & Learn Private Ltd.), defaulted on $1.2 billion of term loans in early 2023.

Pohl said that after he was appointed, he learned that former management had transferred $533 million of Byju’s Alpha’s assets outside of the reach of the debtor and its creditors.

“As a result, I was left with a debtor that had minimal funds and limited books and records, but numerous unanswered questions, including where $533 million of its funds had gone,” Pohl said in a declaration filed Friday.

The debtor’s goal in its Chapter 11 case, with the support of its secured lenders, is designed to answer those questions, and in the process, maximize value of the debtor’s estate for the benefit of stakeholders, the CEO said.

Byju's Alpha was created to raise funds as a borrower under a $1.2 billion term loan facility. Many of the original acquirers of those term loans remain among the largest creditors of the estate. The loans are guaranteed by Think & Learn and five affiliates.

The borrowers had defaulted on the loans within months of issuance, leading to several forbearances and amendments. Pohl said that since then, there have been a series of failed negotiations, along with litigation, as the lenders sought to enforce their rights.

In March 2023, the lenders sent a default notice, accelerated the term loans, directed GLAS as agent to take control of pledged common stock in the debtor and put in place new management. At the time, the lenders believed the debtors had more than $500 million in cash.

However, Pohl said just $550,000 was found in three of the debtor’s bank accounts, which had been located after former management disclosed via a court order obtained in litigation where the funds were.

Pohl said he was later informed that Byju’s co-founder, Byju Raveendran, had said the $500 million-plus in funds were “someplace the lenders will never find it.”

It was eventually discovered that about $533 million had been transferred from Byju’s Alpha to a hedge fund called Camshaft Capital Fund.

In September, GLAS filed state law fraudulent transfer lawsuit against Camshaft in Florida, but little progress was made, Pohl said.

Recently, multiple entities have filed insolvency proceedings against Think & Learn in India. And GLAS, as the lenders’ agent, started its own insolvency proceedings against Think & Learn on Jan. 22.

Pohl said he has been working with the debtor’s and lenders’ counsel to try to develop a path forward for Byju's Alpha.

Since the debtor doesn’t have enough funds to administer its assets or continue litigating, the lenders agreed to provide the debtor with the DIP financing, conditioned on Byju’s Alpha starting the Chapter 11 process.

Byju’s Alpha filed its complaint against Camshaft under seal on Friday.

Byju’s is an India-based educational technology company. The Byju’s Alpha unit is located in Lewes, Del. Its Chapter 11 case number is 24-10140.

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