Byju’s on Friday denied allegations that its US subsidiary Alpha transferred $500 million out of the company by concealing the same from a consortium of lenders. The company said the transfers were in “full compliance” and did not contravene any terms of the parties’ credit agreement and the agreed-upon rights and responsibilities.
“In fact, even lenders have not alleged that the transfer was not permitted under parties’ existing contractual arrangement. As Byju’s Alpha is a non-operative entity, the funds were transferred to other operative entities for growth and expansion in its global operations,” the statement said
The accusation against Byju’s Alpha was made during a court hearing in Delaware on May 18. Glas Trust Company and investee Timothy R Pohl initiated a lawsuit against Byju’s Alpha, its director, Riju Ravindran, and Tangible Play. The two companies being sued are units of Think and Learn, according to filings in the US court.
Byju’s said the litigants have made “bewildering claims” that the company moved $500 million from the US subsidiary. “Byju’s entered into the term loan B agreement with the clear intention of utilising the raised funds to drive growth and expansion in its global operations and is free to transfer and use the funds as necessary,” the statement said.
The company said the lenders’ allegations are “merely insignificant technical and non-monetary defaults. The court order does not have any bearing on any other subsidiary of Byju’s anywhere in the world. Further, this is a temporary order and the Court has not made any final determination against Byju’s Alpha, including in relation to the transfer”.
The lawsuit against Byju’s comes at a time when the startup is under investigation by the Enforcement Directorate for alleged violation of the Foreign Exchange Management Act.
Recently, the company raised $250 million in a fresh funding round from US-based investment firm Davidson Kempner. The fresh round is part of a $700-million fundraise, which is pegged at a flat valuation of $22 billion.