Indian Official Objects to US Court Ruling
A recent US court ruling has placed several units of Indian education technology company Byju's into involuntary Chapter 11 bankruptcy. This decision has surprised and conflicted with insolvency proceedings in India, prompting an official response from Pankaj Srivastava, the Interim Resolution Professional appointed for Byju's.
Srivastava, in a letter following the ruling, expressed surprise and argued that the decision conflicted with ongoing insolvency proceedings in India. He requested a stay on the effect of the bankruptcy, citing his duty to take control of the company's assets under Indian insolvency law.
The US court's decision stemmed from a petition filed by creditors led by HPS Investment Partners. They accused Byju's founder, Byju Raveendran, of violating debt contracts by refusing to provide financial details about the three units in question. The creditors also requested and were granted the appointment of an independent Chapter 11 trustee to manage the Byju's units in bankruptcy.
This development adds another layer of complexity to Byju's already troubled financial situation. The company, once valued at $22 billion and seen as a symbol of India's tech ambitions, is facing numerous bankruptcy cases in India and abroad. Its business, which initially saw a boost during the COVID-19 pandemic, has encountered liquidity issues since the resumption of classroom learning.
The Indian official and the US creditors have been engaged in a dispute over the cross-border bankruptcy procedures. Srivastava's decision to remove US lenders from an influential creditors committee in India further complicates the situation.
It remains unclear whether Srivastava's request will lead to a change in the US court's ruling. The petitioning creditors have expressed disagreement with his letter and urged the judge to sign the order, allowing the bankruptcy to proceed. As of Friday noon, no public disclosure of an order being signed has been made.