The decision, made at a hearing Tuesday in Delaware, will result in involuntary detention. Chapter 11 bankruptcy of units including Neuron Fuel Inc., Epic! Creations Inc. and Tangible Play Inc., according to court documents. The order was entered as a default judgment after the units failed to share requested information with creditors.
The development was “surprising” and “at odds” with insolvency proceedings in India, he wrote. Pankaj Srivastava In a letter sent after the decision, Srivastava, appointed as Byju’s Interim Resolution Professional earlier this year, requested that the bankruptcy be suspended.
The creditors, led by HPS Investment Partners, filed the petition in June, accusing the company’s founder By Ju Raveendran of violating their debt agreements by refusing to give them financial details about the three units. Judge Brendan Shannon also granted the lenders’ request to appoint an independent Chapter 11 trustee to manage the bankrupt Byju’s units.
Byju’s, once valued at $22 billion and a symbol of India’s tech ambitions, is embroiled in more than half a dozen bankruptcy cases in India and abroad. The company’s business got a boost from the Covid-19 pandemic but ran into a liquidity crunch after classes resumed. Creditors in the US and India have been demanding repayment of payments.
Epic and Byju’s other units have opposed the forced bankruptcy. In a court filing in September, they claimed the lenders lacked legal standing to initiate bankruptcy and argued the filings were an improper “tactical maneuver” aimed at gaining an advantage over Byju’s units in related litigation.
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The “resolution professional has a duty to take control of the corporate debtor’s assets,” Srivastava wrote, citing Indian insolvency law. He did not appear at the hearing, court documents show. The Indian official and the U.S. creditors have been at odds with each other in the complicated cross-border bankruptcy proceedings. Byju’s U.S. lenders were removed from an influential creditors’ committee in India, a decision made by Srivastava.
It is unclear whether the Indian official’s request will change the ruling. Byju’s petitioning creditors said they “disagree with the letter” and asked the judge to sign the order so the bankruptcy could take effect, adding that the letter is informal. As of midday Friday, no disclosure of an order signed by the judge had been made public.
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