Pankaj Srivastava, the interim resolution professional (IRP) of Think & Learn Pvt Ltd or BYJU's, has unlawfully removed GLAS Trust Company LLC, which serves as administrative agent and collateral agent under the US$1.4bn (billion) term loans, from the committee of creditors (CoC), alleges the ad hoc group of term loan lenders of Byju's Alpha Inc.
In a statement, the lenders allege that the move is unlawful and BYJU's IRP has been secretly plotting against the US$1.35bn claim of US lenders against the beleaguered ed-tech company.
"Pankaj Srivastava's actions are unprecedented and entirely illegitimate as no interim resolution professional in the history of the Insolvency and Bankruptcy Code (IBC) of India has ever attempted to unlawfully strip financial creditors of claims of this magnitude amounting to more than US$1.35bn without any legitimate reason and in doing so securing his appointment as the permanent resolution professional," the lenders say.
According to the ad hoc group of term loan lenders, before 27 August 2024, Mr Srivastava had repeatedly confirmed in writing and verbally (including in court filings) that the claim filed by GLAS Trust on behalf of the lenders in the amount of Rs11,432.99 crore (about US$1.35bn) had been verified and admitted and that GLAS Trust was undoubtedly a member of the CoC.
"However, on 27 August 2024, Mr Srivastava abruptly cut off all communication to the lenders or GLAS Trust. Since then, he also ignored all efforts by advisors of GLAS Trust to reach him to check-in on the status of the insolvency process. Then, on 30 August 2024, Mr Srivastava informed GLAS Trust and other CoC members that he will reschedule the CoC meeting to 3 September 2024, at 7pm IST. Notwithstanding the foregoing, Mr Srivastava filed a sealed application dated 30 August 2024 with the national company law tribunal (NCLT) to remove 99.8% of the original CoC members (including GLAS Trust) from the CoC. The application was never served to GLAS Trust and the lenders as this was done in secret," the statement says.
Further, the lenders allege that at 10.50am on 3 September 2024, Mr Srivastava sent an email to GLAS Trust, attaching a letter that notified GLAS Trust that it had been removed from the CoC. "At about 11am IST, Mr Srivastava's counsel informed the NCLT that he held the CoC meeting at 10am IST and that he was voted in as the permanent resolution professional at the meeting."
"This means that Mr Srivastava moved the first CoC meeting nine hours earlier without informing GLAS Trust or its advisors. This also means that Mr Srivastava deliberately sent the 3rd September letter only after the conclusion of the first CoC meeting. Importantly, Mr Srivastava dated the 3rd September letter as '1 September 2024' and sent this two days later (i.e., this was backdated to give the impression that it was delivered before the first CoC meeting)," the lenders allege.
They say, "The complete 180-degree change in position, the sealed filing, the secretive change in time of the CoC meeting, and the backdated letter all demonstrate a clear intention to mislead and blindside GLAS Trust and the lenders."
Moreover, according to the ad hoc lenders group, Mr Srivastava's decision to exclude GLAS Trust from the CoC on the basis of purported disqualification notices is completely wrong in law and in fact, and ultimately utterly irrelevant. "Mr Srivastava does not, and cannot, deny that over US$1.35bn is owed under the term loans, that no payments have been made under those term loans for close to 18 months, and that GLAS Trust, as agent, has a clear contractual mandate under the credit agreement to independently act to protect the rights of all lenders, whether disqualified or not."
"The issue of disqualification does not in any way undermine GLAS Trust's claim against Think & Learn or change Think & Learn's financial obligations under its guarantee - all of which Mr Srivastava presumably recognised when he originally admitted GLAS Trust into the CoC. Mr Srivastava's eleventh-hour pretextual arguments to the contrary should be seen for what they are: a clear intent to fraudulently disenfranchise GLAS Trust and the Lenders from the CoC," the ad hoc group of term loan lenders claim.
Earlier, the Supreme Court had denied relief to Byju's on insolvency proceedings, based on an appeal filed by GLAS Trust.
In June this year, certain holders of the term loans and GLAS Trust, as administrative agent and collateral agent of the term loans, have filed petitions under chapter 11 of the US Bankruptcy Code to initiate involuntary chapter 11 proceedings against Epic!, Neuron Fuel (DBA Tynker), and Tangible Play (DBA Osmo), the three US-based guarantors of the US$1.4bn term loans to BYJU's Alpha, in the US Bankruptcy Court for Delaware district. (
Read: Byju's Term Loan Lenders, Agent Initiate Involuntary Chapter 11 Petitions against 3 US-Based Guarantors)
Byju's had taken a loan from certain US-based lenders in November 2021. For that purpose, a special purpose vehicle (SPV), named Byju's Alpha, was incorporated in Delaware.
In March this year, the steering committee representing term-loan lenders of Byju's US$1.2bn loan said that a US judge has ordered to prohibit further movement or use of US$533mn (million) by the ed-tech company which is owed to lenders.
According to the steering committee's statement, the company's co-founders Byju Raveendran and Divya Gokulnath are prohibited by the judge from further transferring or using any of the US$533mn in loan proceeds previously held by Camshaft Capital Fund, and subsequently transferred to an unnamed and unknown offshore trust. (
Read: US court orders Byju's to freeze US$533mn owed to lenders)
