A group of lenders has filed an involuntary bankruptcy petition against three education companies affiliated with India-based ed-tech provider Byju’s, the latest development in an ongoing battle over loans secured by those organizations’ parent company.
The lenders brought the case in U.S. District Court in Delaware against Epic!; Neuron Fuel, which does business as Tynker; and Tangible Play, also known as Osmo.
The lenders have accused Byju’s founders in court of improperly diverting $533 million in loans away from Byju’s Alpha, the U.S. subsidiary of the company. They say they have collectively loaned Byju’s $1.4 billion over time.
In various filings, the lenders claim that Byju’s broke the terms of its loans by failing to provide timely information on its finances and disregarding its loan obligations.
Epic!, Neuron Fuel, and Tangible Play — all of which have been acquired in the last five years by Byju’s — are described by the lenders as guarantors of the term loans to Byju’s.
In a statement, the lenders said their actions are “not intended to disrupt” the work of the three education companies.
“Among other important goals, we have taken this action to protect and preserve the value of Epic!, Neuron Fuel, and Tangible Play,” the lenders said in a statement. “We remain committed to their success and stand ready to infuse the capital necessary to reorganize the businesses.”
They said the companies would “benefit from much needed oversight while a plan is developed to maximize the value of these assets for the benefit of all stakeholders.”
The statement accuses Byju’s of “failed leadership and mismanagement,” and that “significant harm has been done to BYJU’s businesses and the value of the Company’s assets.”
Long-Running Legal Fight
Krishna Vedati, a co-founder of Tynker, told EdWeek Market Brief in an email that his organization will work through the legal process and that “there will be no disruption for customers (present or future).”
“Over the past 13 years, Tynker has served hundreds of thousands of educators and millions of students,” he added, “and will continue to do so going forward.”
Founded in 2011, Byju’s attracted an enormous amount of venture capital and publicity with ambitious plans to enhance student learning experience through video-based learning, globally and potentially in the U.S. It made a series of acquisitions, and its valuation soared to $22 billion as recently as a few years ago, according to reports.
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But the company has faced an array of questions since then, missing revenue targets and drawing financial and regulatory scrutiny. There were also departures from its board and criticism from a key investor. As of earlier this year, the investment firm BlackRock had reportedly slashed Byju’s valuation to $1 billion.
Epic! is a digital reading platform based that draws resources from a wide variety of publishers. Tynker is designed to help students learn coding through curriculum. And Tangible Play/Osmo is a provider of learning games.
