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A consortium of ad hoc lenders said that BYJU’Slawsuit in the New York Supreme Court against them is ‘meritless’, and an attempt to evade fulfilling its responsibilities.

The lenders, who hold a combined ownership stake exceeding 85% of BYJU’S $1.2 billion term loan, released a statement on Thursday. “BYJU’S’ meritless lawsuit against its term loan lenders is simply an effort to avoid complying with its obligations, including making contractually required payments,” the group said in the statement.

“The lender group, comprised of 21 highly respected global institutional investors, has sought to work constructively with the company over the past nine months to cure its numerous defaults and will continue to do so in good faith. However, in the event, BYJU’S intentionally remains in default, the lender group reserves all rights available to it to enforce the credit agreement,” the statement added.

Houlihan Lokey acts as the financial advisor to the group of term loan lenders, while Kirkland & Ellis LLP, Cahill Gordon & Reindel LLP, and Shearman & Sterling LLP provide legal advisory services.

The edtech unicorn has been embroiled in conflicts with its creditors regarding the loan. Earlier this week, it submitted a complaint to the New York Supreme Court to challenge the acceleration of the loan and request the disqualification of Redwood, one of the lenders.

According to a Bloomberg report, the company was expected to fulfill a quarterly interest payment of about $40 million on the loan by the June 5 deadline.

A day later, in a statement, BYJU’S said it cannot be expected to and has chosen not to, make any further payments, including interest, to the term loan B lenders until the court resolves the dispute.

However, BYJU’S noted it maintains its willingness to engage in discussions with the TLB lenders and is “ready, willing and able to continue making payments under the TLB” if the lenders “withdraw their ill-conceived actions and honour the terms of the agreement”.

Last month, the lenders filed a lawsuit against BYJU’S Alpha in the Delaware court. The lenders accused BYJU’S of concealing $500 million from them. The edtech firm, on the other hand, refuted these allegations.

BYJU’S Alpha, a wholly-owned subsidiary of the edtech unicorn, raised the loan in November 2021. This was the biggest TLB being placed by an Indian startup at the time of the raise, but the loan was unrated.

The Bengaluru-headquartered firm recently secured $250 million in new funding through structured instruments at a $22 billion valuation. It is expected to raise an additional $700 million from a sovereign fund at the same valuation.