An unexpected US court ruling has placed bankruptcy units linked to the Indian education technology company Byju’s into involuntary Chapter 11 bankruptcy, catching an official in India off guard. The ruling, made during a hearing in Delaware, affects Neuron Fuel Inc., Epic! Creations Inc., and Tangible Play Inc. These units failed to provide the requested information to their creditors, including HPS Investment Partners, leading to a default judgment.
Pankaj Srivastava, Byju’s Interim Resolution Professional, expressed surprise and disagreement with the ruling, citing ongoing insolvency proceedings in India. Srivastava has requested a stay on the bankruptcy order, arguing it conflicts with Indian law. The Delaware court also approved the appointment of an independent trustee to manage the bankrupt units.
Byju’s, once a $22 billion tech giant, has been embroiled in multiple bankruptcy proceedings globally. While it saw growth during the Covid-19 pandemic, the company has faced liquidity issues since the resumption of in-person classes. US and Indian creditors have been demanding repayments, leading to several lawsuits.
In a recent court filing, Byju’s units opposed the forced bankruptcy, questioning the legal standing of the creditors and labeling the move as a tactical ploy. Srivastava’s decision to remove US lenders from an influential creditor committee in India adds to the tension. Whether his request will affect the Delaware ruling remains uncertain, as the petitioning creditors have urged the judge to enforce the bankruptcy order. As of Friday, there has been no public disclosure of the judge’s decision.
First Published: Sep 14, 2024 | 7:58 AM IST
Original Story https://www.business-standard.com/companies/news/byju-s-bankruptcy-ruling-in-us-comes-as-a-surprise-for-indian-official-124091400075_1.html
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