![Byju’s Alpha unit files for chapter 11 bankruptcy in Delaware Byju’s Alpha unit files for chapter 11 bankruptcy in Delaware](https://images.cnbctv18.com/wp-content/uploads/2023/06/Byjus-Layoff--1019x573.png?impolicy=website&width=590&height=264)
A unit of Byju’s, once one of India’s hottest tech startups, was put into bankruptcy in the US by a court-appointed agent who took over the shell company after it defaulted on $1.2 billion in debt.
Byju’s Alpha Inc doesn’t have enough money to keep fighting with its parent company about the debt, according to court papers filed by the unit’s Chief Executive Officer Timothy Pohl. The lenders required the company to file bankruptcy before they would continue funding Byju’s Alpha, the Chapter 11 petition said.
The company plans to sue a small hedge fund in Florida it has accused of wrongfully helping Byju’s parent hide more than $500 million in cash that should go to creditors, according to the filing.
Parent company Byju’s, an online-education pioneer, continues to run its business in India and beyond even as the fight with creditors threatens its prospects. The company is trying to raise funds at a discount of more than 90% from its previous round to alleviate its financial problems.
Bankruptcy rules will allow lenders to loan Byju’s Alpha money that can be used to continue fighting the parent company. Should Byju’s Alpha ultimately win any money from its legal fights with the parent, the lenders could claim that cash. Complex court disputes in the US can cost tens of millions of dollars if they drag on for years.
The US insolvency case may also give the lenders a modest tactical advantage in its court fights by consolidating much of the litigation against the parent company in a single bankruptcy court in Wilmington, Delaware. The lenders could use the bankruptcy to launch a fraudulent transfer case against the parent company for allegedly moving more than $500 million away from Byju’s Alpha. Such cases are routine in big, corporate bankruptcies in the US.
Byju’s Alpha listed assets of at least $500 million and liabilities of at least $1 billion in its bankruptcy petition. A lawyer for the parent of Byju’s Alpha didn’t return an email requesting comment.
Lenders to Byju’s won a court fight in Delaware late last year that allowed them to appoint a new director — Pohl — to the financing unit. Since then, the lenders and Byju’s parent company have traded accusations in courts in Delaware and Florida, where the battle over the debt default has been carried out.
Last month, the lenders filed an insolvency petition in India.
The US bankruptcy case is BYJU’s Alpha, Inc., 24-10140, US Bankruptcy Court District of Delaware (Wilmington).
Check out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!
![](/static/images/loksabha2024/loksabha2024.png)
![](/static/images/loksabha2024/loksabha2024.png)
Odisha's new CM — who is Mohan Charan Majhi and what prompted the BJP to choose him
Jun 13, 2024 2:54 PM
Election 2024: 504 out of 543 newly-elected MPs are ‘crorepatis’ – Check 10 richest members in 18th Lok Sabha
Jun 12, 2024 9:55 PM
BJP to start nationwide organisational rejig, new party president to be elected soon
Jun 12, 2024 9:31 AM
New Lok Sabha Speaker to be elected in special 8-day session: Report
Jun 11, 2024 6:28 PM