Byju's US Subsidiary Files for Chapter 11 Bankruptcy in Delaware

In a surprising turn of events, Byju's, the prominent edtech company, faced a setback as its US subsidiary, Byju’s Alpha Inc., filed for Chapter 11 bankruptcy in Delaware. This move comes after a court-appointed agent took control of the shell company due to its default on a substantial $1.2 billion debt.

According to court documents filed by Byju’s Alpha CEO Timothy Pohl, the subsidiary lacks the financial means to continue disputes with its parent company over the debt. The Chapter 11 petition revealed that lenders insisted on the bankruptcy filing before extending further funding to Byju’s Alpha.

In response to the financial turmoil, Byju’s Alpha Inc. intends to take legal action against a Florida-based hedge fund, accusing it of aiding Byju’s parent company in concealing over $500 million in cash that rightfully belongs to creditors, as stated in the bankruptcy filing.

Byju’s Alpha disclosed assets valued at a minimum of $500 million and liabilities reaching at least $1 billion in its bankruptcy petition. Despite these developments, no comments were received from the legal representation of Byju’s Alpha’s parent company.

The complex financial dispute escalated when lenders to Byju’s secured a court victory in Delaware last year, enabling them to appoint a new director, Timothy Pohl, to oversee the financing unit. Subsequently, legal battles unfolded between the lenders and Byju’s parent company in both Delaware and Florida, where the debt default controversy played out.

Adding another layer to the financial woes, last month, the lenders initiated an insolvency petition in India, further complicating Byju's position on the global stage. The unfolding events raise questions about the future trajectory of Byju’s and its efforts to navigate the intricate financial challenges it currently faces.