 "Byju's, the edtech giant's founder and chief executive officer (CEO), Byju Raveendran")
Indian ed-tech startup Byju's breached terms of loans worth $42 million and has been asked by an arbitrator not to sell some shares of a group firm, a confidential order showed, the latest setback for the company already battling allegations of mismanagement.
Byju's was India's biggest startup until 2022 when it was valued at $22 billion, but has seen its fortunes dwindle amid an auditor exit, regulatory probes and calls from its investors to oust its CEO Byju Raveendran for mismanagement. The company, now valued at around $250 million, denies any wrongdoing.
In the latest dispute, MEMG Family Office, led by Indian billionaire doctor Ranjan Pai, in March initiated arbitration proceedings against Byju for allegedly not repaying its loans amounting to $42 million through a pre-agreed transfer of certain shares of a Byju's group company, Aakash Education.
An arbitrator, appointed under Singapore International Arbitration Centre rules, has ordered Byju's not to dispose of 4 million shares of Aaaksh, which as per the loan agreement amounted to a 6% stake last year, according to the April 4 order.
A "case of breach of the loan agreement" has been made out, Ritin Rai, the emergency arbitrator, wrote in his order, which is being reported for the first time by Reuters.
Byju's did not respond to a request for comment. A source close to Byju's said the order is not detrimental to Byju and the company is in talks with MEMG to resolve the matter.
During the arbitration proceedings, Byju's said it could not not obtain approvals from certain investors in time which were necessary to transfer the shares to MEMG, the order said.
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Byju has also been unable to pay staff in recent months because it can't access recently raised funds due to a legal dispute with some of its investors, Raveendran said in an internal memo last month, Reuters has reported.
In February, a U.S. unit of Byju filed for Chapter 11 bankruptcy proceedings in a court in Delaware, listing liabilities in the range of $1 billion to $10 billion.
