Exclusive: BYJU'S debt crisis troubles US edtech subsidiaries it no longer owns

A Kerala entrepreneur and his companies registered in India and Dubai have approached the Commercial Court in Ernakulam to ascertain control over two US-based online education platforms, Epic Creations Inc. and Tangible Play Inc., which came into their fold through a recovery clause in a loan agreement they entered with the troubled ed-tech firm BYJU’S.

Admitting the petition of Rajendran Vellapalath and his firm Voizzit Technology Pvt. Ltd and its Dubai-based sister entity Voizzit Information Technology LLC on December 21, the court issued notices to the defendants Think and Learn Pvt Ltd (the promoter company of BYJU’S), Claudia Springer (a Trustee appointed by Delaware bankruptcy Court under the Chapter 11 of the United States Bankruptcy Code), Google India Pvt Ltd, Amazon India Pvt Ltd, Microsoft Corporation (India) Pvt Ltd, Stripe Payment India Pvt Ltd and Apple India Pvt Ltd.

Acquired by BYJU’S in 2021, Epic and Tangible Play provide tutorials and other educational content to millions of students through its 50,000-plus institutional subscribers globally. On September 4, 2023, Think & Learn (T&L) entered into a loan agreement with Riju Ravindran (promoter family) for $100 million which offered strategic conversion rights for 100% ownership of Epic and Tangible Play, including control over all digital platforms, assets, and user data. On December 1, 2023, Ravindran and Voizzit entered into an Assignment Deed whereby Ravindran assigned all his rights under the Loan Agreement to Voizzit for a consideration of $25.5 million thereby transferring all debt rights, conversion options, platform control rights, and enforcement mechanisms of the two companies to Voizzit. On April 2, 2024, Voizzit exercised the rights granted by the Assignment Deed to take over Epic and Tangible Play and established Dubai and India as Epic and Tangible's effective management centre, overseeing technical operations (development, architecture, infrastructure) and strategic decision-making (content strategy, platform enhancements, user acquisition, revenue management).

However, the services offered by Epic and Tangible Play through websites www.getepic.com and www.playosmo.com were affected after BYJU’S got entangled in a legal case with some of its overseas creditors. On October 29, the Delaware bankruptcy Court in the United States appointed a Trustee for Epic and Tangible Play after considering these firms as the US Subsidiaries of BYJU’S under Chapter 11 of the United States Bankruptcy Code. Vellapalath argues that Voizzit owns Epic and Tangible Play, and not BYJU’S, and hence Voizzit’s assets should not be part of this litigation. The case is ongoing in the US.

Meanwhile, in its petition filed before Ernakulam Commercial Court, Voizzit says that the actions of the US Court US-appointed trustee in BYJU’S bankruptcy case claiming the ownership of Epic and Tangible Play has caused its entire businesses to come to a standstill because of an abrupt end of the usage of the domains websites and other incidental services received from the cloud service providers Google, Amazon and Microsoft. The petition seeks a temporary prohibitory injunction restraining the defenders from interfering with the petitioners' access to the domain websites and all other ancillary websites and applications.

The Commercial Court in Ernakulam has fixed January 27 as the next date for hearing the case.