Hello. I know just from reading the title you are likely seething with rage and hate for Alexee. Likely you have already down voted this post. I am appalled by the number of people having already convicted Alexee and now want her lynched.
I am equally appalled by the amount of video the public has access too. This has tainted public opinion and makes it almost impossible she will be afforded a fair and unbiased trial based on actual evidence introduced in court. All of the surveillance video from inside the hospital should never have been released. This violates Hippa Laws and a patient's Right to Privacy. "When you use security cameras in a healthcare environment, the video footage that you record qualifies as PHI. As PHI, video surveillance footage must be protected according to HIPAA regulations.Jun 10, 2021"
Alexee was experiencing an acute medical and mental health emergency and the release / leak of hospital video violates her right to doctor patient confidentiality. For those whose blood is boiling what if this was inside an abortion clinic and a teenager was violated by the release of videos in a patient treatment area? Protesters would be enraged and demand action--where is the outrage here?
Based on the facts as currently known (no discovery yet just what is in public domain and can be verified) this is how I would defend Alexee during a trial. I ask you to consider all of the following:
--Innocence until proven guilty in a court of law--the cornerstone of our legal system and society.
I strenuously argue and expect the following be inadmissible and excluded from trial:
>All video of Alexee inside the patient treatment areas of the hospital--both security cameras and police body cameras excluded .
>Police bodycam footage from inside Alexee's treatment room should be Hippa protected. She has the expectation of doctor patient confidentiality. Police knew there was no crime actively happening inside the hospital room at the moment they entered. The question of IF a crime was committed already occurred in the toilet room previous to police arrival and there was no flight risk from Alexee in a hospital room with one way in and out.
Police violated her civil rights by entering her medical treatment room while Alexee was in a hospital bed. Further police by entering her hospital room delayed urgent medical care Alexee required and placed undue stressors on her during a critical moment when per the statements of the doctor she was hemorrhaging.
>At no point was she read her Miranda Rights. Any statements made during an acute medical and mental health crisis inside a treatment room without her being advised of her Miranda Rights cannot be used against her at trial.
--During all video of her in her treatment room and patient hallway areas--as has been so far illegally released to the public violating her Hippa rights-- Alexee was under the influence of pain medicine administered by the hospital.
Pain medicine alters how Alexee feels, her body's sensations, perception of said sensations, mental acuity, mental state, memory and cognitive ability--this is the whole purpose of pain medications. These are indisputable and known scientific facts for decades which have proven pain medications cause all of these reactions which is why every single pain med has strict warnings not to operate machinery, not to drive Et cetera, Et cetera, Et cetera........ (For those attacking Alexee as mentally deficient, "slow", retarded, "mentally off" and / or view her reactions as not appropriate the hospital had her hopped up on pain medications before she even went to the bathroom. I say shame on anyone convicting her in the court of public opinion under the influence of medication(s) and during an acute medical and mental health crisis.
>Purported pictures of Alexee with her cheer leading team in the grey shirt and holding the megaphone in her uniform. These pictures are all over the internet and have not been verified as authentic. I believe there is a high likelihood these particular pictures have been photo-shopped making them altered fakes. There are multiple indicators of the two most widely distributed photos showing they are not authentic.
The person who took said pictures, origin of the pictures, original metadata and chain of custody of these photos must be discovered and questioned. Once the absolute original files have been discovered, if they even exist, they need to be independently analyzed by a digital photography expert.
I ask everyone to please put the videos you have seen out of your mind as well as it should and will likely be for the jury during the trial. I ask you to consider the following facts as we understand them at this juncture. Use only the following facts to determine if there is any reasonable doubt concerning Alexee and what happened. Even a scintilla of doubt or uncertainty means Alexee should be adjudicated not guilty by a court.
During a trial I argue the following in defense of Alexee:
>Alexee is a teenager. She only recently turned 19. She is inexperienced in life, sex and relationships. Although technically an adult by a few weeks the law is contradictory. She is still in high school due to when she was born and started kindergarten. At 19 she cannot smoke cigarettes, vape or buy or drink alcohol. Society and the law has decided 19 is not old enough to make an informed decision on smoking and alcohol. Her mother treats her as a child.
>Alexee has been treated in such a way by her mother to be ashamed of teen sex and its possible consequences. Her mother despite good intentions created a relationship of shame regarding sex and loosing her virginity. Most teens and even young adults do not share intimate sexual details with theirs parents for many reasons. Consider the added stress the mother has created for years in a misguided attempt to protect her daughter.
People in general but especially children and teenagers deny they did something wrong when accused. A child is observed breaking an item and even though said child knows the parent saw her break the item often will deny they broke it when questioned. There are decades of child psychiatry and doctors to testify regarding this. Those young children grow up to be teenagers and if the parent(s) have not properly handled these learning opportunities at young ages the teenager will have--in this case 19 years--of improper responses of how to handle life.
>Alexee's mother was beaten and abused by her father so badly Alexee was born preterm with hip and spinal problems causing pain on and off her entire life. Imagine the unhealthy relationship regarding sex, men and pregnancy her mother--despite good intentions--during Alexee's life imprinted on a child and then a teen.
>Alexee was taking hormonal birth control pills. We do not know if these were prescribed for acne, menstrual problems or birth control reasons. If prescribed for acne or menstrual problems and Alexee's mom knew she was taking them this combined with her mom's many years worth of admonishment, forbidding and shaming of teen sex and her mother feeling confident her daughter was a virgin--this would create a mental assurance for her mother she could never possible be pregnant.
Likewise, regardless if Alexee was taking hormonal bc with or without her mom's knowledge she would be assured she was preventing any possibility of pregnancy and being safe. Hormonal bc is widely regarded as virtually 100% effective and the best non-surgical option for preventing an unwanted pregnancy. The Pill is the gold standard for being safe and responsible to the point it's common knowledge providing a false sense of security.
The pill is so ubiquitous as infallible even in pornographic videos it is commonplace for the teen or woman to state "pull out I'm not on the pill"--as if she was on the pill it would be 100% guaranteed safe. Teens and even adults are indoctrinated to commonly believe the pill is infallible--even in porn.
We know sex education is lacking in all public schools, her fundamentalist church certainly wasn't providing sex ed, her mom used fear, shame and abstinence as the only approach and her father was a scumbag abuser not even in her life in a meaningful way. Media targeted to teens promotes "safe sex" rarely making a point any bc can fail. It's promoted and considered as an absolute.
No matter how you consider the above facts both Alexee and her mom were very confident there was no way she could be pregnant. Taking the bc pill to Alexee was an assurance she could not become pregnant, she could not disappoint her mom--she was being safe with no risks and in a committed long term relationship. She wasn't "one of those girls" or the school slutt.
>Alexee gained some weight. Everyone knows the Pill can cause weight gain. Its the number one reason teenagers and young women state they don't want to take the pill. There is so much pressure on being thin--especially for a teenager and a high school student going to prom ect. When she noticed she gained some weight of course it was because of the bc pill. She can't be pregnant--of course not--because she's on the pill. How could she be? A quick Google search "can the pill make me gain weight" confirms its common.
If her mom knew about her being on BC this causes no alarms for her mom because not only does she believe her daughter is a virgin she's on the pill and the pill makes many women gain weight.
>Maybe--and we don't know--Alexee was on BC because of menstrual issues. If that was the case then any period irregularities would be explained by known period issues, the pill can make periods light or non-existent in many women so nothing to be worried about if she's irregular, besides irregular periods are common in teens--especially athletes, as a medical fact. It is well known many women bleed during pregnancy at the time when they expect to be having a period so think they are regularly menstruating.
There are even entire TV shows based on the woman not knowing she is pregnant--many are adults in their 30s, experienced in life and many even had previous children!! Plenty of incidents making this fairly common and plenty of respected medical doctors will testify in court to this phenomenon.
>Alexee was treated in the emergency room in December--one month prior--for back pain. The same back pain she experienced on and off her whole life--and the same back pain that would bring her to the ER the night she delivered. She would have been around 32 to 36 weeks pregnant (pregnancy full term is 40 weeks gestation even though everyone commonly thinks 9 months) and at the end of December when seen in the ER. No one, not a single medical professional noticed she was very pregnant while in the hospital four weeks prior to delivering a baby.
>Alexee tells her mom she is in pain in January and needs to go to the ER for treatment. This is significant. If Alexee knew she was pregnant and premeditated killing and hiding the baby from her mom, boyfriend and the world it makes absolutely no sense she would tell her mother she was in pain and needed to go to the hospital. If she premeditated murder and secrecy then she would not have presented herself to her mom in pain and needing medical help. Everyone has seen TV births--although not realistic--there is almost always pain and pushing and then a baby. So Alexee who has premeditated and purposely hidden 40 weeks or pregnancy fooling everyone--her mom, peers, boyfriend, coaches, teachers, nurses and doctors decides to tell her mom she needs to go to the hospital when IF she had realized she was pregnant and consciously hidden and schemed everything!?!?! This makes no sense.
We know for a fact she knew how to do things herself on the "down low". Afterall she wasn't having sex infront of her mom--she went somewhere private to do the deed. If her premeditated plan all along was to knowingly conceal........see where this is going?
>January ER visit considerations:
--Alexee's mom had three kids--makes her very experienced at pregnancy--and has no idea Alexee is pregnant.
>Alexee is seen by and triaged by a registered nurse. She does not notice she is full term and in active labor. The duty of and sole purpose of the triage nurse to identify acute medical conditions needing immediate and emergency treatment--like say heart attacks or active labor.
>Alexee is taken to a hospital exam room and seen by the intake nurse--another registered nurse-- who's duty is and is trained to takes vitals, acquire pertinent information, makes trained medical observations and prepares the patient for possible required exams for when the doctor arrives--all of this on behalf of the doctor.
This nurse does not notice she is full term pregnant and in active labor. Remember that part above "prepares the patient for possible required exams" if the nurse has any indications the issue was in anyway related to female reproductive organs or involved the vagina the nurse would have the patient--Alexee--change into a gown for a possible pelvic exam.
She does not do this--Alexee is not in a hospital gown so another registered nurse experienced in emergency medicine--nurse number two--is completely oblivious to a full term pregnancy and active labor.
>The doctor comes into the exam room. This is a licensed and trained medical doctor specializing in emergency medicine. She speaks with and presumably examines Alexee for her back pain--to do anything less is malpractice. This medical doctor, certified and practicing emergency medicine orders pain medicine administered to Alexee.
We have a trained and experienced MEDICAL DOCTOR that does not realize Alexee is full term pregnant and in active labor. Remember those photos on the internet I discussed earlier and believe them to be faked and photo-shopped? If they were real and she was that visibly pregnant tell me two registered nurses and a licensed medical doctor given the symptoms displayed, age of the patient and the obvious dynamic between mom and daughter about keeping her virginity and you still don't this she is full term pregnant and in active labor.
The dynamic observed between Alexee and her mom the doctor had the DUTY as a standard of car to ask the mother to leave the exam room so she could privately discuss things with Alexee.
>We have all been in the hospital and ER so we all know how this goes. We know another nurse came to administer the pain meds and to administer test(s) order by the doctor. (we also know this by the police interviews of all medical personal involved)
This is nurse number three not noticing a teenage girl is full term and in active labor!!! Not just any registered nurse but the Emergency Room CHARGE NURSE--the head of the nurses in the ER at that time. (he's the male nurse in the videos wearing a skull cap).
>We know one of the tests ordered by the doctor and administered was a pregnancy test. A pregnancy test that results POSITIVE. We have a teen girl patient in extreme pain who is sure she isn't pregnant and is adamant she is not pregnant because I don't believe she thought she was. This patient is in an exam room and you the medical staff and especially the doctor DO NOT immediately return to the exam room to conduct a simple and quick pelvic exam (which doesn't even require a doctor a nurse can do and routinely do pelvic exams).
>Instead the doctor orders an ultrasound. So time passes when a quick pelvic could have been done but wasn't and in comes the ultrasound tech. She DOES NOT HAVE THE PROPER WAND ATTACHMENT TO CONDUCT A PREGNANCY ULTRASOUND. On top of this she is an Ultrasound tech--certified and trained--and even after attempting an unsuccessful ultrasound doesn't realize Alexee is full term pregnant with a baby literally in the birth canal in active labor.
Keep in mind the certified and trained ultrasound tech who has done presumably dozens, if not hundreds, if not thousands of ultrasounds on pregnant women in labor--because ultrasounds are common in virtually every pregnancy--this tech doesn't realize Alexee is full term and in active labor.
We KNOW the ultrasound tech had to pull up Alexee's shirt to expose the skin on her stomach to attempt the ultrasound (because you can't do an ultrasound without skin to wand contact via some snot-like medical grade jelly).
IF the tech thought Alexee was in active labor, full term and close to delivering does anyone not think she wouldn't tell a nurse or the doctor?? "Hey you better check on this girl right now?"
>None of the medical staff even tells Alexee her pregnancy test was positive. Alexee and her mom still have no idea Alexee is pregnant.
>Alexee feels like she needs to use the bathroom--to have a bowel movement. The nurses and doctor allow her to get up, unaccompanied and waddle / run holding her bottom all the way down the hall. Alexee has NO IDEA she is pregnant--has never been told by any medical staff and didn't see the baby on the ultrasound because the tech botched the procedure not having the correct wand.
>Common knowledge to most people--lay people--as a baby enters the birth canal and crowns the woman feels an overwhelming urge to have a bowel movement. We expect even at the lowest and most minimal level of care by registered nurses and licensed doctors to know a woman in labor experiences a sensation of needing to have a BM before the baby is born. Medical facts and training teaches nurses and doctors to instruct the woman to push the baby out as if she was pushing to have a BM. We know virtually every woman has a BM at some point while pushing.
Alexee and her mom still have no idea she is pregnant at this point despite being seen by three registered nurses, an ultrasound tech and a licensed MEDICAL DOCTOR.
The medical staff KNOWS 100% Alexee is pregnant-and has known long enough to send in an ultrasound tech perform a botched ultrasound--and yet the medical staff knowing all of this allows Alexee to waddle-run down a hall holding her bottom, ALONE and be in a bathroom over 20 minutes.
We are so far past medical malpractice on so many levels to the point of gross negligence and blatant disregard for Alexee-the patient. I've seen a lot of cases of malpractice at busy hospitals but nothing has ever come close to the malpractice and willful disregard for patient care and safety as I have learned in this case.
>Alexee, doesn't know shes pregnant, feels like she needs to have an urgent BM. She's on the toilet, shes in pain, pushing feels good because that is what her body is telling her and everyone knows if you feel super constipated with a huge and heavy poop that's stuck as soon as you get it out you will feel better.
At some point Alexee's body takes over--humans are animals--and like animals a body will birth a baby as an automatic process regardless if the mom is ready or not. Regardless if the mom is even conscious or not--after all comatose patients have delivered babies spontaneously.
This is that time.
I know everyone is going to shout but she should have called for help ect ect.
Really think about this and consider:
>Alexee is a teenager, young and inexperienced with her body and womanhood. She only just barely meets the legal definition as an adult buy mere weeks and can't even buy vape or a pack of smokes and she's still in high school. An adult by technicality only she is in high school, acts very immature and has not had any life experiences as an adult.
>Alexee has been to the ER twice in 30 days time and is in the ER at this very moment sitting on a toilet with an incredible urge to poop, she's seen by half a dozen trained medical professionals even just moments ago and she knows they gave her a pregnancy test "just in case" and no one has told her she's pregnant, she's scared to death but in her mind she's on the birth control pill and not a single person at the hospital during two visits has told her she's pregnant. She has NO idea a baby is about to come out. It's not possible to her and based on all we know she has confirmation in her mind time and time and time again she is NOT PREGNANT. In fact, she is on her period she thinks, she sees blood--yes confirmation of period, cramps, pain, nausea--all valid, legitimate and known period indicators. She can't be pregnant as we have established and since she is at the hospital they would have told her if she was. She has back problems, thinks she is on or starting her period and is constipated worse than she has ever been--of course combined these are the cramps and pain from the pitts of hell.
>Experts will testify at some point in that toilet room she disassociates with her body. Now she is in fear, overwhelming pain, anxiety, young with limited life experience. She has been drugged by the doctors with pain medicine which affects her sensations and cognitive abilities and decision making. She wants to yell for help but she can't. There is no voice, no words and no actual realization as to what is happening to her.
>This is NOT unheard of. Fear is a power controller. Every person responds differently. Many people do nothing and totally freeze and are oblivious to external stimuli. History is full of people--aged and experienced adults who are trained professionals in life and death situations who freeze and cannot function or function in a totally illogical way.
--The airline pilot who despite thousands of hours of flight experience suddenly forgets how to fly or simply does nothing. Or does something so incredibly stupid and so contradictory to every bit of training and flying instinct makes the wrong response causing the plane to crash. (Atlas Air B767 / Continental Express Q400 / UPS A300)
--Trained soldiers in battle firing on their own fellow soldiers wearing the same uniform right in front of them but in that moment they kill their friends.
--A veteran police officer responding to a school shooting in Florida so overcome with fear he cannot enter the building to do the job he has trained, practiced and done for 25 plus years of his career resulting in dozens of children dying or injured.
--A respected gray-haired "old salt" ship captain who has crossed the Atlantic hundreds of times in his 50 year career--actually the admiral of the fleet-- who becomes impotent when his ship hits an iceberg and after giving the orders to evacuate disappears from leadership. (Titanic)
The recent Idaho murders the downstairs roommate, who has experienced actual adult experiences living on her own in college, comes FACE-TO-FACE with the killer while her four friends and roommates are bleeding out locks herself into her room, goes to bed and does NOTHING for hours until the net day. This is despite her admitting she heard a pained / muffled scream, moaning, an unknown voice and came face-to-face with the killer POTENTIALLY while the victims could have been saved with immediate medical care. She is defended by society as bearing no burden or negligence because she was young, scared and had been partying so was under the influence of substances.
Wait a minute........so was Alexee. Ironically some of the same people in this very forum who defended the Idaho roommate for being completely without burden by ignoring and going back to bed want to lynch Alexee or lock her up for her entire life.
Can we under all of these circumstances expect a teenage girl who has every legitimate reason to be sure she is NOT pregnant and not in labor expect her to be rational in this moment?
If Alexee herself didn't know she was pregnant, had no reason to expect she was pregnant, was on birth control, her mom who has had three pregnancies doesn't notice, her peers don't notice, her teachers don't notice, her coaches, her church, her boyfriend AND....
TWO VISITS TO THE ER / HOSPITAL 30 DAYS APART
the visit where the birth occurred:
THREE REGISTERED NURSES
ULTRASOUND TECH
EMERGENCY ROOM DOCTOR / LICENSED MD
If ALL of the people in Alexee's life and ESPECIALLY TRAINED MEDICAL PROFESSIONALS did not notice or realize she was not only pregnant but in active labor HOW CAN WE EXPECT ALEXEE--a teenager--TO REALIZE THIS WHEN SHE TOOK HERSELF TO A HOSPITAL WANTING HELP?
The hospital and its staff disgust me. They acted with total disregard to Alexee and human life. Not a single nurse or doctor even bothered to try and resuscitate the baby when it was found. Most likely the baby was beyond resuscitation but for medical professionals in a hospital to not even attempt to save the baby after totally botching the standard of care for Alexee up to this point shows how criminally negligent everyone who treated Alexee that night is culpable for the death of a child.
The state has WAY overcharged Alexee. At most she should be facing abuse of a corpse. She needs mental help not jail. She is not likely to ever re-offend.
The ER doctor should be charged with manslaughter and negligence resulting in a death as her level of care was grossly negligent.
My heart goes out to the little boy who is not live--stillborn or otherwise. All life is precious.
So is Alexee and her life. This is beyond horrible for all involved. Every single person in Alexee's life failed her time and time again.
Do not as a jury pr society fail her again and sentence her to life in prison. There is so much reasonable double of premeditation and medical negligence / indifference in this case it would be criminal for a jury to convict her of Premeditated Murder in the 1sr degree.
I pray for everyone involved on so many levels. This case has no winners--only losers . Every single person in contact at any point with Alexee--but especially on the night in question-- and Alexee herself has a heavy cross to bear for the rest of their lives.
The nurses and ultrasound tech should be retrained, put on probation to be monitored making sure they have the skills and judgements needed to care for patients and the medical doctor should lose her license.
Alexee especially as well as her mother and boyfriend need education and counseling.
Thank you for your time and consideration.
​

https://heathercoxrichardson.substack.com/p/june-9-2023
At 3:00 today, Washington D.C., time, Special Counsel Jack Smith delivered a statement about the recently unsealed indictment charging former president Donald J. Trump on 37 counts of violating national security laws as well as participating in a conspiracy to obstruct justice.
Although MAGA Republicans have tried to paint the indictment as a political move by the Biden administration over a piddling error, Smith immediately reminded people that “[t]his indictment was voted by a grand jury of citizens in the Southern District of Florida, and I invite everyone to read it in full to understand the scope and the gravity of the crimes charged.”
The indictment is, indeed, jaw dropping.
It alleges that during his time in the White House, Trump stored in cardboard boxes “information regarding defense and weapons capabilities of both the United States and foreign countries; United States nuclear programs; potential vulnerabilities of the United States and its allies to military attack; and plans for possible retaliation in response to a foreign attack.” The indictment notes that “[t]he unauthorized disclosure of these classified documents could put at risk the national security of the United States, foreign relations, the safety of the United States military, and human sources and the continued viability of sensitive intelligence collection methods.”
Nonetheless, when Trump ceased to be president after noon on January 20, 2021, he took those boxes, “many of which contained classified documents,” to Mar-a-Lago, where he was living. He “was not authorized to possess or retain those classified documents.” The indictment makes it clear that this was no oversight: Trump was personally involved in packing the boxes and, later, in going through them and in overseeing how they were handled. The employees who worked for him exchanged text messages referring to his personal instructions about them.
Mar-a-Lago was not an authorized location for such documents, but he stored them there anyway, “including in a ballroom, a bathroom and shower, an office space, his bedroom, and a storage room.” They were stacked in public places, where anyone—including the many foreign nationals who visited Mar-a-Lago—could see them. On December 7, 2021, Trump’s personal aide Waltine Nauta took two pictures of several of the boxes fallen on the floor, with their contents, including a secret document available only to the Five Eyes intelligence alliance of the U.S., Australia, Canada, New Zealand, and the United Kingdom, spilled onto the floor.
The indictment alleges that Trump showed classified documents to others without security clearances on two occasions, both of which are well documented. One of those occasions was recorded. Trump told the people there that the plan he was showing them was “highly confidential” and “secret.” He added, “See, as president I could have declassified it….Now I can’t, you know, but this is still a secret.”
This recording undermines his insistence that he believed he could automatically declassify documents; it proves he understood he could not. In addition, the indictment lists Trump’s many statements from 2016 about the importance of protecting classified information, all delivered as attacks on Democratic presidential nominee Hillary Clinton, whom he accused of mishandling such information. “In my administration,” he said on August 18, 2016, “I’m going to enforce all laws concerning the protection of classified information. No one will be above the law.”
The indictment goes on: When the FBI tried to recover the documents, Trump started what Washington Post journalist Jennifer Rubin called a “giant shell game”: he tried to get his lawyer to lie to the FBI and the grand jury, saying Trump did not have more documents; worked with Nauta to move some of the boxes to hide them from Trump’s lawyer, the FBI and the grand jury; tried to get his lawyer to hide or destroy documents; and got another lawyer to certify that all the documents had been produced when he knew they hadn’t.
Nauta lied to the grand jury about his knowledge of what Trump did with the boxes. Both he and Trump have been indicted on multiple counts of obstruction and of engaging in a conspiracy to hide the documents.
Eventually, Trump had many of the boxes moved to his property at Bedminster, New Jersey, where on two occasions he showed documents to people without security clearances. He showed a classified map of a country that is part of an ongoing military operation to a representative of his political action committee.
Trump has been indicted on 31 counts of having “unauthorized possession of, access to, and control over documents relating to the national defense,” for keeping them, and for refusing “to deliver them to the officer and employee of the United States entitled to receive them”: language straight out of the Espionage Act. Twenty-one of the documents were marked top secret, nine were marked secret, and one was unmarked.
These documents are not all those recovered—some likely are too sensitive to risk making public—but they nonetheless hold some of the nation’s deepest secrets: “military capabilities of a foreign country and the United States,” “military activities and planning of foreign countries,” “nuclear capabilities of a foreign country,” “military attacks by a foreign country,” “military contingency planning of the United States,” “military options of a foreign country and potential effects on United States interest,” “foreign country support of terrorist acts against United States interests,” “nuclear weaponry of the United States,” “military activity in a foreign country.”
Smith put it starkly in his statement, “The men and women of the United States intelligence community and our armed forces dedicate their lives to protecting our nation and its people. Our laws that protect national defense information are critical to the safety and security of the United States and they must be enforced. Violations of those laws put our country at risk.”
On Twitter, Bill Kristol said it more clearly: “These were highly classified documents dealing with military intelligence and plans. What did Trump do with them? Who now has copies of them?” Retired FBI assistant director Frank Figliuzzi noted that there is a substantial risk that “foreign intelligence services might have sought or gained access to the documents.”
There is also substantial risk that other countries will be reluctant to share intelligence with the United States in the future. At the very least, it is an unfortunate coincidence that the Central Intelligence Agency in October 2021 reported an unusually high rate of capture or death for foreign informants recruited to spy for the United States.
Since Trump supporters have taken the position that Trump’s indictment over the stolen documents is the attempt of the Biden administration to undermine Trump’s presidential candidacy, it is worth remembering that Trump’s early announcement of his campaign was widely suspected to be an attempt to enable him to avoid legal accountability. Attorney General Merrick Garland appointed Special Counsel Jack Smith precisely to put arms length between the administration and the investigations into Trump.
Smith noted today, “Adherence to the rule of law is a bedrock principle of the Department of Justice. And our nation’s commitment to the rule of law sets an example for the world. We have one set of laws in this country, and they apply to everyone. Applying those laws. Collecting facts. That’s what determines the outcome of an investigation. Nothing more. Nothing less.
“The prosecutors in my office are among the most talented and experienced in the Department of Justice. They have investigated this case hewing to the highest ethical standards. And they will continue to do so as this case proceeds.”
Smith added: “It’s very important for me to note that the defendants in this case must be presumed innocent until proven guilty beyond a reasonable doubt in a court of law. To that end, my office will seek a speedy trial in this matter. Consistent with the public interest and the rights of the accused. We very much look forward to presenting our case to a jury of citizens in the Southern District of Florida.”
Likely responding to MAGA attacks on the FBI and the rule of law, Smith thanked the “dedicated public servants of the Federal Bureau of Investigation, with whom my office is conducting this investigation and who worked tirelessly every day upholding the rule of law in our country,” before closing his brief statement.
The indictment revealed just how much detailed information Smith’s team has uncovered, presenting a shockingly thorough case to prove the allegations. Trump’s lawyers will have their work cut out for them…although the team has shifted since this morning: two of Trump’s lawyers quit today. The thoroughness of the indictment also suggests that Trump and his allies might have reason to be nervous about Smith’s other investigation: the one into the attempt to overturn results of the 2020 election.
Some of Trump’s supporters are calling for violence. After Louisiana representative Clay Higgins appeared to be egging on militias to oppose Trump’s Tuesday arraignment, Democratic senate majority leader Chuck Schumer (D-NY) and House minority leader Hakeem Jeffries (D-NY) issued a joint statement calling for “supporters and critics alike to let the case proceed peacefully in court.” Legal scholar Joyce White Vance noted that it was “extremely sad for our country that this isn’t a bipartisan statement being made by leaders from both parties.”
—
Notes:
https://www.justice.gov/opa/speech/special-counsel-jack-smith-delivers-statement
https://www.cnn.com/2023/06/09/politics/walt-nauta-trump-indicted/index.html
​​
https://storage.courtlistener.com/recap/gov.uscourts.flsd.648653/gov.uscourts.flsd.648653.3.0_2.pdf
https://www.nola.com/news/politics/clay-higgins-urges-war-over-trump-indictments-author-says/article_db78acde-0701-11ee-af01-73c2414fd4d7.html
https://www.nytimes.com/2023/06/09/us/politics/trump-indictment-lawyers-trusty-rowley.html
https://www.nytimes.com/2021/10/05/us/politics/cia-informants-killed-captured.html
https://www.cornellpolicyreview.com/the-executive-records-recovered-from-mar-a-lago-and-the-c-i-a-s-missing-informants/
https://www.law.cornell.edu/uscode/text/18/793
Twitter links:
BillKristol/status/1667332834514616320
JRubinBloggestatus/1667287186616754177
JoyceWhiteVance/status/1667277258183065601
petestrzok/status/1667276941043351555
djrothkopf/status/1667237607388880922
petestrzok/status/1667276952439324674?s=20

Satta Matka is a popular form of gambling that originated in India. It has a rich history, going through various stages of evolution from its inception to the present day. While I can provide information on its past and present, I'm unable to predict or speculate on its future development beyond my knowledge cutoff date in September 2021. Nevertheless, I'll provide an overview of the past and present of Satta Matka.
1.Past: Satta Matka traces its roots back to the 1950s in Mumbai, India. Originally, it was known as "Ankara Jugar," which involved betting on the opening and closing rates of cotton traded on the New York Cotton Exchange. The practice soon expanded to include betting on other forms of gambling, such as playing cards, horse racing, and cricket matches.
Over time, the system evolved into what is now known as Satta Matka. In the 1960s, a man named Ratan Khatri introduced the concept of declaring random numbers based on playing cards. These numbers were placed inside a pot, and a person would draw three cards to determine the winning numbers. This method became immensely popular and led to the growth of the Satta Matka industry.

1. Present: In the present day, Satta Matka has undergone significant changes due to technological advancements and the shift to online platforms. With the advent of the internet, Satta Matka expanded its reach beyond physical locations and entered the online space. Several websites and apps now offer a platform for people to participate in Satta Matka games, making it more accessible to a larger audience.

The rules and formats of Satta Matka have also evolved. Today, participants choose a series of numbers from a predetermined set and place bets on them. The winning numbers are then determined through a random selection process. The game has gained immense popularity in India, with many people participating in the hope of winning substantial amounts of money.

1. Future: As mentioned earlier, I can't provide insights into the future of Satta Matka beyond my knowledge cutoff date. The future development and trajectory of Satta Matka will depend on various factors, including legal regulations, societal attitudes towards gambling, and technological advancements.

It's worth noting that gambling practices are subject to legal restrictions in many countries, including India. Therefore, any changes or advancements in the Satta Matka industry would likely be influenced by the legal framework governing gambling activities.
To stay updated on the future of Satta Matka, it would be best to follow news sources, industry trends, and legal developments within the gambling sector in India.

Intro

After base Rise which released on March 2021 on Switch and early 2022 on PC, Sunbreak was released in late June 2022 with new direction. The director is different, with inclusion of Frontier stuffs added in the game. This adds more variety of content with new features. Sunbreak is the game with most modern platforms present, ranging from PC (or Gamepass), portable consoles (Switch), and home consoles (Xbox Series, PS4/5).
Retrospective: are you satisfied with MHRise?
At last, the final version has come on 8 June 2023 which is the version 16. That means it marks almost a year of title updates (TUs) which has 5 TUs + 1 bonus update. With that, various additions and improvements are added until the latest version. Several monsters -- new and returning -- are added, menu improvements, extensive post-game content, and more.
Of course, any game has their own pluses and minuses which is up to you to interpret. With that, I want to make evaluation and verdict about Sunbreak for you to have some thoughts and opinions for this expansion.
For categories, I divide the category into:

1. Gameplay: weapon/buddy/follower combat design, equipment and skill design, quest design, level design, monster combat design
2. Presentation: visual design, animation, audio design, soundtrack, story, and cutscenes
3. Experience: user experience, controls, accessibility, performance, multiplayer
4. Support: title updates, improvements
5. Endgame: post-game content, grinding

As a caution, spoilers are open. Now, let's get started

1. Gameplay

Self explanatory. You play the game, right?...right?
1a. Weapon combat design
Sunbreak introduced new switch skills and new feature: switch skill swap. The swap changes switch skills in two loadouts: red scroll and blue scroll. With this, players can switch their playstyle around switch skills. Moreover, new switch skills introduced make the combat flashier and more customizable than before. Other than that, these weapons get balance updates even prior title updates. Some playstyles get more balance changes so that the gameplay feels balanced than before.

1. Which weapon do you main? Are you having fun with these new features?
2. Which weapon gets the most/least benefits for these new skills?
3. Which weapon is the most/least improved, balance wise?
4. Which weapon convinces you to try more after getting these new features?
5. What do you want to see more about these skills? Do you think these added skills will be implemented for the future games? (example: moves from switch skills will replace the some of the core movesets permanently for next game)

1b. Buddy, follower, and endemic life
Buddies, such as Palico and Palamute, got new equipment and skills. This means they can now contribute more than before. More tools and gadgets added for expanding the game.

1. What do you think about their new tools and abilities? Are they significant enough towards combat gameplay which makes you depend on them?
2. Do you think those buddy skills will be implemented for the future?
3. Should this buddy system be implemented for the future?

Besides buddies, there are followers. Same as buddies, they can support for players during combat. Buddy amount wise, you can have four buddies: two pets and two followers. As a note, followers are only available at single player.

1. Who's your favorite follower?
2. Do you think followers should contribute more?
3. Do you think followers should be implemented for next game?

Don't forget about endemic life too. Sunbreak also added new endemic life to expand further to gameplay, ranging from various wirebugs (ruby, gold) and more creatures (marionette spider, etc.).

1. Which new endemic life do you think has the most/least benefit?
2. Should this endemic life system be implemented for next game?

1c. Equipment and skill design
This is where it goes spicy. Equipment is the most crucial, meta-defining feature in the game.
For weapons, the stats are varied than before with additional trees. The ramp-up skills for weapons in Rise are changed into a decoration, called rampage decorations. This allows weapons to use rampage and one-off skills.

1. Stat wise, do you think the weapons are balanced enough? What are the best/worst weapon trees?
2. What do you think about the change from ramp-up skills into rampage decoration? Does it ease the customization more?
3. Most/least favorite rampage skill to use?

For armors, the skills are getting varied more than before with returning skills from previous games but with modernized mechanics. Some skills are more radical and thematic with representing monsters. For example, you have to reach certain damage to buff your stats on time, otherwise you got debuff (bloodlust); or let's say you can change buffs according to your scroll color but some has tradeoffs (furious, mail of hellfire); or another one: changing your health mechanics but benefits into damage (berserk, dereliction).

1. Do you think these lineup of armor skills are good or better than before?
2. Most/least favorite armor skill to use?
3. Most/least impactful armor skill so far?

How about the initial balance? To balance these skills, usually the decorations are determined by decoration level, from Lv1-Lv4. To accommodate the feature, some armors, weapons, and talismans get a slot for those

1. How is the balance of armor skills, whether it's for the stats or decoration level? Is is balanced enough?

For post game features like Qurious Crafting (armoweapon) and talismans, I'll elaborate in Endgame section
1d. Quest and level design
For quests, the design remains the same, except now we got follower quests. These quests are specifically designed to delve more into certain followers. Other than that The quest design is improved for story purposes, meaning that we can understand more the story.

1. What do you think about quest design that integrates more to a story?
2. Some quests are presented once (example: afflicted Lunagaron story), meaning the set piece cannot be replayed again. What do you think about this decision?
3. What do you think about follower quests and its progression? Does the reward worth the content?

For level design, we got two major areas: Jungle and Citadel. Jungle is a recreation from MHFU Jungle. The map features rich and vibrant design with added verticality (it has rain at night!). Citadel is a new and larger map designed with three themes of environment: forests, snow, and castle. While they are at most large, it's dimension is still approachable

1. What do you think about those maps so far?
2. Should they recreate more old maps?
3. What should be the ideal size for a map? Horizontal vs vertical design?

What about rampage quests? Rampage has finished its story so there are no rampages in Sunbreak. However, some levels use heavy artillery from rampage implemented there.

1. What do you think about heavy artillery in Sunbreak, since they are shown a bit limited? Should they implement them more?
2. On heavy artillery, how would you design a level/quest/area with focus on that?

Lastly, arena stages like Gaismagorm arena and Forlorn arena. While they are straight to the point, the helpers are there with various endemic life placed for the arena

1. Are the arenas good enough to play?

1e. Monster combat design
With introduction of Master Rank, monsters are getting harder with some movesets added and/or changed. New moves are trending at chip damage, multiple hits, or big hits. Some are faster to counter player counterattacks, aerials, blocking, and more. With this, it creates more challenge to hunt with these pace

1. What do you think about the trends of monster combat design?
2. Do you think these trends should exist in future game?
3. Which monster is most/least improved from High Rank to Master Rank?
4. Which Sunbreak monster is good enough for a combat? Is that also your favorite monster to fight against?
5. Which monster feels the most faiunfair, even for the new ones?

Talking about monsters, don't forget about wyvern riding. Prior Sunbreak release, we have been given a feature not to force ride if hitting the monster. However, wyvern riding for new monsters has more moves and combos. Sometimes, single strong movement is not enough.

1. What do you think about wyvern riding moveset for new monsters?
2. Which new monster is the most fun for wyvern riding?
3. With endemic buffs like ruby/gold wirebug, which one do you prefer?

2. Presentation

Presentation is where players can experience the art direction of the game, including the visual and audio identity of the game
2a. Visual design
After the eastern or let's say Japanese centric visual direction on base Rise, Sunbreak goes into rather "European" direction (at least east Europe centric?). We can see medieval style with some of the equipment, character design, and even monster designs. However, this feels different compared to western style used in old school MH (talk about MH1 and MH2). Those gens were truly darker in theming, but now it's vibrant, which can be a balance to old approach blended with fantasy feel

1. What do you think about the shift of visual direction from Rise to Sunbreak?
2. What do you think about the character, NPC, and equipment designs?
3. What do you think about environmental designs especially the village and the areas?
4. What do you think about monster designs in general?

A bonus about returning contents remade, such as returning areas and monsters. Polygons and texture resolution are getting upgrades. Environmental lighting retouches the materials of areas and monsters. Skyboxes rich in color makes vibrant feel for the game.

1. What do you think about these graphical update for returning contents such as monsters and areas? Does it still have the same charm as source material?

2b. Animation design
The animation is something MH doesn't miss for this kind of content. We can see the facial expressions during cutscenes (later discussed in 2e), new moves, better implemented animations on equipment design, monsters' animation, NPCs, and more. Moreover, some of these animations are motion captured, meaning that it can match realistic movement with creative freedom. While in final product feels faster, it's still realistic due to the capture

1. What do you think about general animation design here?
2. What would you like to see the animations forward?

2c. Audio design
Another thing about these cool arts are audios. Playing with sounds with choice of output options such as speakers/headphones/soundbars makes varying experiences. Besides that, audio designs for the game are getting more oomph, such as explosion sounds with enhanced bass and middles.

1. First of all, what kind of audio output you usually play on? What do you hear, feel, and think about audio design on the game? Which audio preference do you choose in the options settings?
2. What do you think about audio design in Sunbreak? What makes it different than Rise?
3. Are there standouts for great audio design in Sunbreak (not limited to sound effects)?

2d. Soundtrack
Audios are something to hear, including the soundtrack (OST if you like abbreviations). OST direction in Rise were inspired with Japanese instruments, something that was mostly presented in MHP3rd. It added vocal choirs for each areas and monsters. In Sunbreak, the direction is different. There are more emphasis on classic instruments with fewer choir segments. As a tradeoff, the horns section is more frequent than before. That's no exception with returning OSTs such as Jungle music and monsters like Astalos, Seregios, Magalas, and more. They even invited the original composer to rearrange said monsters to give a faithful feel.
To give reference, Sunbreak OST directory is here. Also, I created the MH composer list

1. What do you hear, feel, and think about the Sunbreak OSTs in general? What do you like from them? What are your favorite track(s)?
2. What do you think about original composer rearranging some returning OSTs? Do you feel something different? Is it necessary to do?
3. What kind of soundtrack direction do you want forward?

2e. Story and cutscene design
Story in MH is arguably not the kind of priority, mostly for the lores and stuffs. However, for Rise series, they are more emphasized, direct, and personal. This direction continues in Sunbreak, enhancing what's missing from Rise (minus Rampages). Characters are more expressive, including side characters who gives somewhat more important backstory. And of course, there are more character content. First, the follower quests which makes more character story. That also supported by their social media team who gives more further information about character story. Moreover, if you see the characters, their names are more personal and given rather than by title. For example: the name's Galleus vs Admiral
Cutscene design is no exception. While they are basically have focused direction as Rise, The experience is still good. You can feel the overall tension of the story.

1. What do you think about the story so far? Does is more direct and "in your face" compared to older games?
2. What story aspect that stands out for you, and what aspect that can be improved?
3. How's the cutscene so far?
4. What do you think about names which is now personal than being a title in previous games?
5. Do you think they should emphasize more into the story in the future?

3. Experience

Experience is how players experience the game, such as how to access the game, how does it control and perform, and the multiplayer experience
3a. Overall user interface and user experience
With UI and UX improvements, such as loadouts, equipment & talisman navigation, quest navigation, etc., the overall experience is improved from what's inside Rise. That applies in Rise version especially UX updates.

1. What is the most improved aspect of the UI and UX in this game?
2. How was the experience when you entered Sunbreak the first time? Did it overwhelm you?
3. Is the tutorial popup helpful or at least improved, judging from the timing and how it's described in the game?
4. What kind of UI and UX you want to see in the future?

3b. Menu information (visual)
Menu is the most vital part of MH, giving people information about what's up. In hunter's notes, unlike previous games, they've shown actual numbers and meters to inform the values. This is huge in meta aspect, making the fight easier to analyze such as hitzone values, weakness thresholds, and more. Another thing is the armor skill descriptions. There are some consistencies need to be desired such as when to show the numbers in description or not. For example: damage +10 vs (further) increases damage.

1. What do you think about these menu information? Does it inform you enough, or do you want it more?
2. Do you think they need to make descriptions more concise or verbose, or should they release more numbers in description?

3c. Controls (motoric)
In combat section, with introduction of switch skill swap, the controls become more complex. At least they have shown the UI for indicator, which is still a good thing. For PC, there are control improvements, even though there are some unfamiliarities transitioning from controller to keyboard and vice versa

1. What do you play with? Does it play responsively?
2. Optional: do you make the transition from one control to another? (example: controller to KbM)
3. Switch users: do you feel different controlling in portable/docked mode?
4. Does this game need full button remaps or at least button presets?

3d. Audio experience (audio)
This has slightly different question than audio design in section 2. There are extensive audio controls in this game, including 3D audio. With this option, players can listen the direction of the sound

1. How's the audio engineering? Is it well mixed?
2. How's the 3D audio so far? Any differences compared to basic version?

3e. Performance and graphics (tech)
Title, so I straight up ask

1. For PC, optional: specify the main PC specs such as CPU, GPU, storage, RAM, VRAM. How does it perform in your PC? What are the most intensive performance so far? How's the driver update treat the performance? Is there a bottleneck so far?
   1. frame rate: 30, 60, 120, or unlimited fps?
   2. How's the booting time? Does it concern you?
2. For home console: specify the console used. How's the performance so far?
3. For switch: how's the performance on portable and docked mode? Are there changes on optimizations?
4. In terms of graphics, where are the most beautiful scenes? (excluding cutscenes)

3f. Multiplayer (online)
Multiplayer is one of the key features to experience in MH. Because of it, this time I put them in experience section. Although the experience is basically the same in Rise, there can be improvements, maybe a bit subtle, so I'll ask again

1. How's the general experience of multiplayer in Sunbreak? Are there improvements compared to Rise?

I forgot to mention in Rise, the quest design flow is a bit different. If we compare to World, Rise is offline first. This affects how quests are designed. For the host, quest can be toggled for online but only in the hub whereas World can toggle while hunting due to online first design (SOS Flare +++ quests). Now for the finder, you can search while in "offline" mode (should I say asynchronous mode since searching lobby is basically online?). You can select specific quest. But there is one caveat, you don't know the players playing the quest or not, so for the finder it can be frustrating if there are no specific quests posted.

1. Do you think this is a good multiplayer quest design so far? Is there something that needs to be improved?
2. What should be the better multiplayer system for MH? (doesn't need to be retrospective)

4. Support

4a. Title updates
Title Update (TU) is the most vital part of the game given how to make the game long lasting until now. TUs come with bunch of stuffs, including but not limited to monsters, gimmick weapons, additional weapon balances, followers able to participate anomaly quests, new craftable decos, and more. In fact, besides updates, we get more QoL features and improvements based on the feedback to make more convenience.

1. What's your opinion about the overall TU lineup for Sunbreak?
2. Which TU feels significant content wise? Also, which TU is your favorite?
3. What do you think about how they treated weapon balance prior updates?
4. Is the QoL across the updates enough, mainly for UI and UX aspects, or is there something that needs to be addressed more?
5. Does the performance stable enough to handle TUs?
6. Does the TU make grinding easier over time?

4b. Event quests
Event quests are operated independent against TUs. As the name suggests, let's jump straight to questions:

1. Do you like that the updates are independent against TUs?
2. Downloadable quests vs scheduled event quests?
3. Are you satisfied about the rewards after completing even quests??

5. Endgame

5a. Anomaly quests, monsters, and grinding
After the final boss, there are anomaly quests that elevates the difficulty from the base version. Majority of monsters get afflicted with qurio parts to break with indications if some parts are broken, the player(s) passes the damage check which topples monster. Otherwise, monster unleashes large and stunning AoE damage which is kind of dangerous. Some may say it's akin to MHGen hyper monsters which has hyper parts needed to hit to increase hunter arts gauge. The rewards? You get afflicted materials.
However, anomaly quests and the rewards are not enough. They introduce anomaly investigations. This may be similar to MH4U endgame quest (disclaimer: I don't play MH4U). Anomaly investigation has the level system that needs to be increased to get better rewards with a increased difficulty. These rewards

1. What do you think about anomaly quest design, and what about the rewards?
2. What do you think about anomaly investigation design, and what about the rewards? Does the rewards worth the time to grind?
3. In case of investigation. What is your usual time to beat the quest? How exhausting is the progress by grinding more? What do you think about its increased difficulty and the damage?
4. What do you think about afflicted monsters gameplay? Is it well designed for its stats, mechanics and moveset?
5. Favorite afflicted monster to fight?
6. Which monster is the best/worst for anomaly quests?

As the anomaly endgame goes further, we are introduced with Risen elder dragons, who got in control with qurio to make them afflicted. Risen elder dragons difficulty is increased with exclusive moves that explodes anywhere near (or a bit further) with fearful damage. What makes them different than afflicted monster is they don't inflict bloodblight as the afflicted ones.

1. What do you think about risen elder dragon so far, whether for its difficulty, moveset, time to complete, etc?
2. What's your usual completion time for risen quests? Does the reward worth the grind?
3. By completing these anomaly quests with some level requirement, you can unlock a new decoration and craft it from those quest rewards. Therefore, there are variety of decorations as opposed to Rise. Is this system good enough to be implemented

5b. Qurious crafting: armor
As the reward for completing anomaly quests, you get items for augmenting equipment a bit further, particularly afflicted essences. Qurious armor takes the augmenting further, adding or trading skills so that the augmentations can be mixed.

1. Whats your opinion about qurious crafting in general?
2. How grindy is this in comparison to previous games' grindy sections (like MHW deco grind and others)?
3. In terms of augmentation, do you like the fact you can have a tradeoff involving defense, slots, and skills?
4. Do you think this augmentation is better implemented for next game? Or are there other suggestions for armor augments?
5. Bonus: do you play without qurious armors this whole time? ^{Because I do}

5c. Qurious crafting: weapons
Back in Rise, you can ramp up the weapons with rampage skills. Since Sunbreak, these upgrades are replaced by qurious weapon crafting. This features stat increases such as raw/elemental attack, sharpness and slot upgrade, and other upgrades like shell types. What makes them different compared to qurious armor crafting is this one's requirement is fixed and can minmax freely after you unlock what's desired. This system doesn't reward randomly like in armor. However, with this characteristics, the grind is real that you need to reach some of highest level of anomaly investigation

1. What's your opinion on qurious weapon crafting in general?
2. Do you think this kind of augmentation can be implemented for later games?

5c. Hazard quests
Hazard quests was introduced in late title updates. Currently, these quest is implemented for all monsters after accomplishing anomaly investigation level 300, event quests, or even hub quests. These quests introduces modified movesets for monsters and also increase their health. In practice, the rewards are title badges and more.

1. What do you think about hazard quests so far? How's the difficulty of it?
2. Does it worth the accomplishment?

Closing

This is a closing part of the post. MH Rise series has come into the end with Sunbreak final update. We don't know what will happen how for the mainline series goes, but this marks for 2 years of service including planned last event quests at 27 July 2023. I believe there are many community contribution through this series, ranging from fanarts to in depth meta guides.
Last but not least, after these evaluations, it's time for the verdict.

The verdict: are you satisfied with Sunbreak?

Thank you
---
Resources by OP:

• Sunbreak moveset flowchart diagram
• Sunbreak combo analyzer

INTRODUCTION:

BYND is a company that produces plant-based meat. It’s currently at its growth period having their IPO very recently in 2019. These couple years have been rough for BYND as it burns through cash to establish market share, faces negative net income and multiple health scares. Management’s plans for success are Price Parity with Animal protein, Enhancing Taste, Aroma and Texture to taste like Animal protein, Education on Misinformation + Health benefits of BYND and Plans to cut off fats such as Better Inventory management, Layoffs, Increased capital efficiency, Improve their operating expenditure situation.
REVENUE:
TOTAL ADDRESSABLE MARKET
I’ve used a top-down approach when building my revenue model. I followed the revenue forecast of the meat industry [Plant based inclusive] (SOURCE)
%STAKE
The %stake of the market held by BYND changes to a small extent to avoid being too optimistic in my forecast. I used historic numbers when forecasting %stake.
COST
The general principle I took for forecasting Cost was following management’s guidance from 2023 Q1, their goal of “Sustainable growth” and focusing more on margins.
COGS
Initially, COGS is going to be lower from reduction in co-packing and overall headcount bringing production more in house.(SOURCE)
But going forward, COGS is going to be lower due to higher economies of scale. (SOURCE) Management has set forth that they plan to achieve price parity with animal protein by 2024, so the largest fall in COGS will appear in the first few years of forecast.
The moment price parity is achieved, I’d guess that it takes 2-3 years for BYND to reach close to the level of margins as the animal protein industry as BYND needs to sort out other issues e.g., how to more efficiently ship higher volume, Agriculture has ops. margins of 7.84% (SOURCE).
ADVERTISING
Advertising is going to slightly increase in the first few years of forecast. Management has stated that there is a lot of disinformation in the market and consumers are relatively unaware of the health benefits of BYND (SOURCE). So, management will scale up advertising efforts. Opting for less granularity I assume that advertising will remain the same as 2022.
SHIPPING
Opting for less granularity when forecasting Shipping, the cost of Shipping is constant for the past few years so Shipping is assumed to follow historic trends.
During the high growth period, BYND may be not ready to deal with larger volume of sales so I’d assume that cost of shipping slightly ticks upwards for the next 2-3 years before tending back down.
OVERALL
Margins of BYND will be higher than Animal protein due to cheaper production cost (SOURCE), e.g. Pea protein costs $5/kg whereas Animal protein costs $300/kg
NON-CASH ADJUSTMENT:
D&A and CapEX
Management has given out guidance that they want to get more capital efficient, so for the first few years of forecast I’d assume that BYND has net negative or close to net negative CapEX for the first few years. Onwards, as BYND develops better products and gets more widely recognized they will begin priming their net reinvestment for growth before tapering down for maturity.
Change in NWC
Management has given guidance that their inventory levels are quite high and they are planning on selling off, I’d assume that the first few years they are aggressively selling off inventory. But in the long run, they will have positive change in NWC as I believe they may require to hold some stock.
WACC:
COST OF EQUITY
RFR (1M Average) = 3.53%
4105.02 = [4.58% x 4105.02] x (1+5%) / (1+R) + ([4.58% x 4105.02] x (1+5%)) x (1+3.417%) / R - 3.417% / (1+R) ^2
R = 8.635%
ERP = 5.105%
Beta = 2.00 (SOURCE)
COE = 13.74%
COST OF DEBT
BYND has no credit rating, negative EBIT so no interest coverage ratio and no outstanding bond with a market YTM. So, the best proxy to use is book yield.
Interest expense = 3.966M
Total Interest-bearing Liability = 60.359M
COD = 6.57%
WEIGHTAGE
BYND has 1 billion worth of convertible bonds at conversion price of $206 per share, so it’s OTM.
Total liability = 1093.05M
Share price (1M Average) = $10.185
Shares O/S = 64094.52M
Market Value Equity = 737727.91M
%Equity = 99.8%
%Liability = 0.02%
Marginal Tax Rate = 21%
WACC = 13.71%
EFFICIENT WACC
The elevated WACC that BYND faces is only because it is a new company with an unproven business model and not yet enjoying the full extent of economies of scale. So, I’ve looked at the averages for the agriculture industry and assumed that BYND will tend towards these numbers as the business gets more efficient, COD remains constant.
Average Unlevered Beta = 0.91
Average D/E ratio = 33.87%
Average Levered Beta = 1.15
Average COE = 9.40%
Average WACC = 8.33%
R&D:
R&D
Historical data has to be reconciled as management treats R&D expenditure as an operating cost. This is inaccurate as R&D provides value for more than a year, so it should be capitalized. Assume R&D expenditure counted from 2017 onwards and it takes 6 years to develop a product. (SOURCE)
CONCLUSION:
I value BYND at $17.10 for my base case. BYND has a hidden pocket of value that most investors do not consider, their NOL carryforward. Even when we take a conservative view and only consider those that do not expire. Their NOL carryforward is still 738M. I believe that as countries turn to be more environmentally conscious BYND will be the first in line to profit. Even if environmental concern is out of the picture, plant protein has a huge potential to be significantly cheaper and even healthier than animal protein. The less privileged will be able to benefit from this, not having to pick between health and hunger.
DCF (BASE) : [SOURCE]
DCF (WORST) : [SOURCE]
DCF (BEST) : [SOURCE]
Revenue Model : [SOURCE]
Cost Model : [SOURCE]
QUESTIONS & POTENTIAL ERRORS:
1) How can BYND penetrate into Asia if most products are Westernized e.g., Burger patty?
2) BYND may not be able to achieve EOS as “The common plants used for protein in alternative meats, such as peas, are only being produced in a few countries” (SOURCE)
3) Given that I used book yield as a last resort, it may not necessarily give the most accurate representation for Cost of Debt.
4) Management may or may not tend towards the efficient wacc I’ve defined in my DCF for reasons such as they may not be able to cheaply do it or may not see a need to do so in general.

Hi All,
Hockey has been around for a long time and of course there have been some extraordinary records set since the NHL was established. For new people to the sport it's worth having a look back at some of the more unusual, just in case you're wondering what is possible in a single game or over the course of a career. Do you know of any other worthy contenders to add to the list?
Most Career Goals by a Goalie
The classic, you might wonder what they were doing so far out of position on a regular basis, but this record is held by Martin Brodeur who has put away three goals. Ron Hextall was next in line and put the puck away behind the opposition goalie twice.
Amount of time spent in equipment after winning Stanley Cup
A bit of an obscure angle to take but certainly hard to beat by anyone with a sane mind. Shjon Podein spent a full 25 hours in his gear (supposedly to match his jersey number) after Avalance won the Stanley cup in 2001, even sleeping in it apparently.
Fastest Hat-Trick ever recorded
The quickest player to put away 3 biscuits in quick succession was Billy Mosienko when playing against the New York Rangers in a 1952 game - it only took him a lightning fast 21 seconds to complete.
Most Goalies used in one season
You might expect teams to stick with their seasoned veterans, but the Flyers managed to have a season where they rotated out 8 different goalies. Three other teams have seen a total of 7 goalies each pass through their roster in a single season. LA Kings in the '07-'08 season, St. Louis Blues in '02-'03 season and Quebec Nordiques in the '89-'90 season.
Highest games played between goals
Sometimes players just get unlucky and get a tough break when it comes to scoring. Ken Daneyko is probably the supremo when it comes to that, going a whole 255 games without scoring any goals. Consider a season is 82 games and it means he went over 3 seasons with nothing.
Most fighting majors in a career
Some guys just like to engage and Tie Domi is the number one among them all. He has 333 career NHL fights and a total of 3,515 career penalty minutes. So roughly one half of his total career penalty minutes were fights.
Total scars on a players head
A rather bizarre record and not sure who actually made note of it first, but Eddie Shore was able to accumulate 19 scars around his head throughout his 3 decades of play as defenseman.

(I wrote this poem about my experience with online grooming to help work through the inexplicable pain I felt. I continued on to compete in Speech and Debate with this piece and at this point just want a place to archive it. I hope it reaches someone who needs to hear it.)
[5 min read]
"It started around June 21st, 2021. Which means it's been just over a year, since I was groomed by an adult man. I stand here today to prove to no one but myself, that I can talk about this chapter of my life, and that it is okay to. I am here to be living proof that abuse doesn't mean the end. That you are never too far gone, and you're always worth loving. My abuse story will never look like someone elses, but it stands as an example to prove how some adults are able to manipulate children, even in seemingly passive ways. It took maybe seventeen months to realize the abuse I went through is valid, and worth sharing to help prevent others from making my same mistakes."
I was 16 And a dreamer wanna-be A blue bird in training I live in a beautiful golden cage, With food and water, And a key.
With everything I needed, Discontent reared her ugly head. Shallow hatred of the ways I'd speant my life Begging for something Of substance I didn't want money, or friends, I wanted to send a piece of myself away To trust a man To be grown up For someone To understand
I was 16 And a dreamer turned bird-clipping-its-own-wings Safety meant nothing to me My dreams were jungle palm And my self-hatred a machete
I would have loved to cut through To prove to everyone who knew What was the true center I was nothing, of what I presented- Not the beautiful palm Or crystal waves- I was the hatred The ugly The disinterested way I was Unhappy to be Who sent a piece of unhappy across the sea To a man who knew
I was 16 I still believed in Prince Charming So I gave him the key. I let him inside my cage And smiled and said, "See? We're meant to be! It's the perfect size, You can sleep there, And I'll keep the peace." This arrangement just so happened to be, That I kept things clean, While he turned beautiful words Against me.
I danced in the compliments Reveled in the sweetness of voice Because when given the choice I could not be happy with me
I, a child with tear wrought eyes, Sought sanctuary secretly inside This man's lies. Lies which qualmed the seas of Self hate quieted the jungle cats Who ate my insides Letting the world exacerbate My deteriorating brain
And when caught in that cage, Forced to face The intimacies of men There simply, was no escape.
Health class doesn't teach you How thoes images scar The cage tightened around me Like a dinosaur in tar, Forcing me to confront What my mind couldn't spar-
I told myself "I am 16, This is normal Girls and guys get less formal After less time then this."
So I stayed. I cut my own damn wings Because It seemed Men would only want me For breast For thigh To cast my eye upon him And do as he pleased
I was his, entirely But he was nothing for me. Nothing but vocal chords echoing Through my body Picking out my insecurities With tweezers to keep me tethered. He told me everything I wanted to hear, Sending soft smiles Through my ears While remaining That I was gaining Around the waist
So to compensate I scraped wing and bone Clip off what was me Suck in Pinch sides Cling to his words Listen to lies Roll back your eyes His sweet sighs Comply His noble arrogant pride Comply comply
I was 16 And believed the problem was me If I cried, I was weak If I said no, I was the creep I begged for sleep And got scolded for Trying to leave
I was 16 And learned Prince Charming was a jerk. He didn't care if I said no He only cared that it hurt!
Though feathers regrow And no scars can be seen Inside my golden cage I scream
He never touched me. Still I shrink from any man's company Compliments are manipulation Smiles see right through me Imaginary scenes of the empty threats you sewed to me Haunt my waking hours And devastate any of my dreams This man never picked the lock, I gave him the fucking key
I was only 16 and a year between is nothing to me Now showing my friends My clipped wings Begging for their sympathy That they will let the past be And understand 16 year old me Doesn't want to be seen
I am damaged. A Little girl has seen things she never wanted to see. I spent time after trying to Reclaim the old me. Give me a reason Not to end All my relationships with men Before the age of 10 Because then, there was purity. Sweetness in the eye of she who see Men as a saftey net. And not as an open threat
I'm only sharing, out of necessity Because he shared everything with me A pass time that became blackmail To personal items on the paleness of my body
My brain keeps ping-ponging between He loves me He loves me not How can I stop? Attentions addicting Cocaine to the brain Of the beat up and lonley The 16 year old bird With only one melody, "I mean nothing in the eyes of society Because no one recognizes when there's grooming"
A fact that has been growing ever since My sense of self worth, My passion in life, My body, my secrets, my cries, All of it no longer mine
I sent that piece of myself away All to say, "I loved a man once. See how grown I am? He chose me over all the other little girls. There was passion in all that he touched He touched me- My heart I mean. He treated me like a woman And threatened me just the same."
You know there was pride In the way he cried I was "opening up." Like exposing my body Was something to be copied
And of course... Once was never enough And if I ever said no, God help the soul, He said he'd take it from me anyway Would travel states, Drive night and day, To claim and rape me
I was 16 And it was summer break
Of course when I explained The things he claimed Scared me, Suddenly- It was all a silly little fib.
Now you stare me in the eyes And explain to me How a glorified rape joke- Was funny
The terror it instilled In a still-growing teen And how how I laughed and sighed And agreed- It was funny.
Of course, it never really was
I wish I remember how it ended. I'd like to say I blew up And he surrendered And admitted to his Abuse of power- But.. no. I'm sure I just said, "I have to go" And never looked back At what I used to call home
I still live with the effect, The names he used to say, The way he'd make me behave Especially how he had trained my brain To think that shit Was normal.
But everyday I realize The same stupid thing: Nothing about my past Is ever going to change.
I can cry Scream Rearrange every dream Fix every seam- But even blue birds clip their wings, Occasionally
Though feathers regrow, And no scars can be seen, Now inside my golden cage- I can sing

Original Source: https://boringmoney.in/p/byjus-is-sued-by-its-lenders
--
Four years ago I read an article in The Ken titled The making of a loan crisis at Byju’s. The gist of the story was that Byju’s was an edtech doing phenomenally well selling its digital courses to parents of young students. But these courses were expensive and these parents were poor. So it was also selling them loans to buy these courses. Only, without telling them. Parents would expect a course (which could be cancelled) but would end up with a loan (which couldn’t be cancelled).
Three days ago, Byju’s went to court in New York. Here’s the headline from TechCrunch: Byju’s sues ‘predatory’ lenders on $1.2B term loan, won’t make further payments.
Byju’s is a company that, arguably, made a business out of giving out predatory loans. Now it’s sued its own lenders and accused them of being predatory. I’m not saying that this is poetic justice but.. okay, scratch that. This is poetic justice! If Shakespeare were a finance writer this is the kind of stuff he would come up with.
Everyone wants to lend to Byju’s
In 2021, interest rates were low, loans were cheap. Tech startups were doing great, edtech startups were crushing it. Byju’s, not one to be left behind, had raised a lot of money but money was cheap so it also wanted to borrow. It wanted a $500 million loan from lenders in the US, which it wanted to use to acquire companies there. Instead, it ended up borrowing more than double—$1.2 billion—because lenders practically wanted to throw money at this overachieving edtech startup from India. [1]
The way a term loan such as this works is:

1. A company goes to an investment bank and asks for a loan
2. The bank syndicates this loan to investors, who become the lenders. Everyone comes together in a room and negotiates the specifics of the loan (which can be quite complex, as we’ll see)
3. The loan goes through and everyone’s happy. Presumably, the company likes its lenders, the lenders like the company
4. The original investors might sell the loans they own to other investors. The company’s only talking to an administrative agent representing the lenders, so over time it might not even know who its lenders are

In November 2021, prominent investment managers such as Blackstone, Fidelity and GIC had gone overboard to lend money to Byju’s. By September 2022, Byju’s lenders were desperately selling [2] their loans at a 36% discount on the principal. (Today, Byju’s debt is at a 20% discount, which is also bad.)
It’s likely that Blackstone, Fidelity and other of the OG lenders aren’t Byju’s’ lenders any more. They’ve almost certainly sold off their loans at a loss. Better get paid something than get paid nothing.
Dealers of the dead
If a company’s debt is being sold at a 36% discount, it’s because investors think that the company is unlikely to repay its loans. If you buy such a loan, you potentially stand to gain a lot—because of the discount—but well, you might also just lose everything.
If you’re a regular investment management company, like Blackstone, you don’t want to invest in such a loan. Your investors gave you this money to get predictable returns. If they wanted risk, they’d ask you to buy stocks. You don’t want to get into a fight with your borrower. If you feel they will not pay you back, you take a loss, sell the loans, move on.
If you’re a distressed debt investor, your entire business is to buy such distressed loans from regular investment managers like Blackstone. You’re going to get nasty borrowers who are unlikely to want to repay their loans but that’s okay. Because you’re nasty too. You spend less time on financial models, more in courts and around lawyers. You like to fight to get your money back. Sometimes you might lose, but the times you win, you win big. The wins cover your losses and some more.
Blackstone and the others sold Byju’s’ loans in desperation, and they were almost certainly bought by distressed debt investors. We don’t know who they are exactly, but Byju’s has indicated that one of them is Redwood Capital, a New York-based distressed debt investor.
If you’re a distressed debt investor, this is how it works:

1. You get a loan for super cheap
2. If the company repays its loan, great! You make a lot of money
3. But the company isn’t likely to repay, which is why you got the loan for cheap in the first place
4. So it’s in your best interest to not let the company die a slow death. Instead, you want to kill the company quick. You take the company to court ASAP and take all the money you’re owed while it’s still there

If the new investors waited, say, for a year, and took Byju’s to court after it had actually defaulted on its repayments—there might not be any money left! Byju’s may have given all the money to Lionel Messi or maybe laundered it away someplace the lenders wouldn’t find it. If you’re a distressed debt investor, you want to get Byju’s to court and get the court to force it to do whatever it takes to pay you back.
Last month, Byju’s’ new lenders sued Byju’s in the Delaware Court of Chancery [3]. We’ll get to the official reasons for this lawsuit in a bit, but what’s important is that Byju’s was not being sued because it defaulted on a payment. It hadn’t. It was being sued because the distressed debt investors expect it to default sooner or later, and they would prefer dealing with it sooner rather than later.
Lenders go for the kill
Usually, the finer details of corporate loans such as Byju’s’ aren’t public. But thanks to the multiple lawsuits we know quite a bit here.
The loan was made to Byju’s’ US entity and it was secured with guarantees from multiple Byju’s companies. From Byju’s’ lawsuit this week against its creditors (which I will get to), here are the guarantors:

1. Byju’s entities in India and Singapore
2. Byju’s’ US and Singapore acquisitions; companies including Oros, Epic, Great Learning, and Neuron
3. Whitehat India, Byju’s’ famous Indian acquisition

That’s a lot of companies guaranteeing a loan! Byju’s’ Indian entity is the parent of all the other guarantor companies, so having it as a guarantor should’ve been enough. I guess the rationale here was that it would be nice to have some non-Indian companies in the mix too, we do know how efficiently Indian courts work.
Apart from Byju’s the parent company itself, Whitehat was the only other Indian company guaranteeing this loan. The problem was that Whitehat itself, on paper, had negative net worth. It had probably taken loans of its own and did not have enough assets to cover them. In practice, this would be irrelevant, because Whitehat was owned by Byju’s and it would cover any of Whitehat’s liabilities. But, apparently, RBI regulations require Indian companies with negative net worth to take its approval before guaranteeing a loan. So even though Whitehat was a guarantor, the guarantee was meaningless until RBI granted its approval.
Yeah, well, RBI didn’t grant its approval. From the lawsuit:

Plaintiffs, Borrower, and Lenders had a call on or around October 6, 2022, to discuss the Whitehat Guarantee. In a good faith effort to negate any impact of the new regulations, Plaintiffs and the Borrower offered to move all assets out of Whitehat India into other subsidiaries of the Parent Guarantor that are Guarantors to the Credit Agreement, or are owned by Guarantors of the Credit Agreement. Lenders rejected this proposal without justification.

In October 2022, after Byju’s’ debt was already sold to the distressed debt investors, the company spoke to its lenders and informed them that it was unable to get RBI’s approval for Whitehat to be a guarantor. Instead, it offered to move Whitehat’s assets into other companies and then use those companies to guarantee the loan. Which would really have been the same thing. But the lenders refused! Why?!
Continuing from the lawsuit:

Lenders subsequently asserted that an event of default under Section 8.1(e) of the Credit Agreement (an “Event of Default”) had occurred due to the failure to procure the Whitehat Guarantee.

Oh, that’s why. Byju’s’ lenders—distressed debt investors that wanted Byju’s dead ASAP—used the fact that Whitehat couldn’t be a guarantor of this loan to claim a default and use it as a reason to take Byju’s to court in the US. Honestly, I’m impressed. The Whitehat guarantee was redundant to begin with, but the lenders had found an out and their official reason #1 to take Byju’s to court.
Oh, there’s another thing. In June 2022, The Ken reported that Byju’s’ financials for 2021 had been held up by its auditors because of certain, umm, creative accounting. By this time, Byju’s should have ideally filed even its 2022 financials. It was very late! From the lawsuit:

The FY’21 Audit was delivered to the Lenders on August 30, 2022. It did not contain a “going concern” qualification or any similar qualifications about the Parent Guarantor’s ability to continue into the future. However, the FY’22 Audit could not begin until the FY’21 Audit had been completed, and the Parent Guarantor’s business has continued to grow rapidly

Byju’s’ 2021 financials were held up because auditors weren’t giving the company their go ahead, so of course its 2022 financials were held up as well.

On or around August 29, 2022, Shearman & Sterling, LLP (“S&S”), counsel for GLAS, sent a letter to Byju’s Alpha and Think & Learn requesting certain financial disclosures from Plaintiffs and Borrower, and asserting that the failure to deliver this financial information was a breach of the Credit Agreement. ... Rather than actually suffering any damage from the delayed FY’22 audit, Lenders opportunistically used this unintentional and non-material delay to exert pressure on Plaintiffs and the Borrower to extract onerous economic concessions.

I love it! Byju’s’ financials were delayed. Its agreement with the original lenders said that the company must share its audited financials with them. Byju’s wasn’t able to do that. The lenders found their official reason #2 to take Byju’s to court.
Byju’s sets up an offence
Before the lenders sued Byju’s last month, Byju’s tried its best to negotiate a deal. It gave the lenders an assurance of the company’s financial health, gave them concessions worth “tens of millions of dollars” and requested (pleaded) to take back their claims of Byju’s defaulting.
The lenders refused. They asked for either the full principal back or two-thirds of it, with an increment of 7% (!!) in the interest rate. Byju’s, of course, said no.
At this point, Byju’s knew that the lenders weren’t going to negotiate realistically. So it prepared its own offence. From the lawsuit:

The Credit Agreement prohibits transfers or assignments of the Lenders’ interests in the Term Loans to “Disqualified Lenders.” The Credit Agreement includes in its definition of Disqualified Lender “[a]ny [] Person (including an Affiliate or Approved Fund of a Lender) whose primary activity is the trading or acquisition of distressed debt,” and “those banks, financial institutions and other Persons separately identified by name . . . on or before the syndication . . . (which may be updated . . . from time to time . . .)”

In its agreement with the original lenders, Byju’s had put in a clause restricting its loan from being transferred to distressed debt investors. This is a risky clause to agree with, because it’s only these folks that buy loans that turn sour, but the original lenders had gone with it.

On information and belief, the entire course of Lenders’, and Defendant’s, bad-faith conduct has been driven by these distressed-debt lenders, who were never meant to have been lenders in the first place, and who acted with the intent of causing harm to Borrower and Plaintiffs. Meanwhile, Borrowers and Plaintiffs were initially unaware that the lenders were in fact being controlled by distressed debt dealers, and were therefore unable to take action to prevent their bad-faith plan from being implemented.

In its lawsuit this week, the crux of Byju’s’ argument is based on the fact that its loan is owned by distressed debt investors who were not eligible to be owning its debt in the first place. Also interesting is that Byju’s doesn’t seem to know who these lenders are. In its post-lawsuit statement, Byju’s named Redwood as one of the lenders, but it’s not named anywhere in the lawsuit.
Now what?
If push comes to shove, does Byju’s have the cash to pay off its lenders?
Last month, Byju’s transferred $500 million out of its US entity. The lenders had filed their lawsuit and there was a chance the court would freeze Byju’s’ US entity’s assets, so this was a precautionary move. So Byju’s has this $500 million. But that seems about it. Byju’s has been in the news saying that it’s trying to raise $700 million to pay off its debt. Yeah, between the horrible edtech market and the colourful lawsuits Byju’s is in, good luck with getting investors to donate their money to Byju’s.
But of course, Byju’s is now suing its lenders too. It does have an agreement that says that its debt can’t be held by distressed debt investors. So it’s not a frivolous suit.
Can Byju’s win? Sure. It would still have to pay its debt eventually. And it’s not straightforward. There are probably tens or even hundreds of lenders. It’s apparent that the distressed debt investors are the guiding force behind the lenders’ lawsuit, but it’s definitely not necessary that they form the majority of the lenders. In which case, Byju’s’ whole lawsuit falls apart.
The lenders are saying Byju’s defaulted by not keeping its part of the agreement, even though it had technically paid its dues. [4] Byju’s is saying that the lenders shouldn’t be the lenders in the first place and must be disqualified. We’ll see who’s right.
Footnotes
[1] It was a 5-year loan with a floating interest rate of 6% over Libor. Think of it as 6% over this magical interest-rate called Libor that some fancy-pants banks set amongst themselves everyday. Back in November 2021, Libor was at 0.25% and this was a 6.86% interest loan for Byju’s (the floor for Libor was 0.75%). Today, Libor is at about 5.64% and it’s an 11.6% loan.
[2] Multiple reasons for the investors to sell. One, interest rates went up and cash became more dear. If they had money stuck with Byju’s, it was money not being lent out to someone else. Second, edtech all around the world was in trouble. Kids were back in school and people didn’t think much of them anymore. Third, Byju’s as a company was showing its red flags.
[3] What a cool name!
[4] Until now, that is. Byju’s filed its lawsuit this week the same day it was supposed to make a $40 million interest payment.
Original Source: https://boringmoney.in/p/byjus-is-sued-by-its-lenders

Just wanted to get this off my chest. I feel like a moron.
HENRY background: Mid-late 20s. Online business previously earning around 400-500k in revenue with 300k in profits annually, business started in 2019. Business has slowed down, expecting 300k in revenue with 150-200k in profit this year. Also a W2 job in a separate industry (healthcare) paying around 80k annually but expecting to pay around 500-600k annually in roughly 4-5 years. Total net worth right now around 460k. Paid off undergraduate/med-school debt with business income.
2 years ago, the 2021 stock market was a raging bull machine. I was naive and though stocks just always go up. Hit around 700k net worth towards the very end of 2021. Combination of my online business doing well and (in hindsight) some very lucky options positions in big tech. Enabled portfolio margin, which really enabled some high-leverage plays long and short options. Early/mid 20s at the time and really felt like things could not be going any better and I became overconfident in the market.
Fast forward to today, huge portfolio drawdown from the 2022-2023 downturn, taxable brokerage account essentially went down 60% peak to trough.
Net Worth Jan 2022: 700k (500k taxable brokerage, 80k SEP IRA, 120k cash)
Net Worth June 2023: 460k (210k taxable brokerage, 185k SEP IRA, 65k cash)
I feel like I've just been making terrible after terrible decisions in the markets. Holding on too long to losers in 2022 to just fumbling the ball in 2023. I've tried timing the market again and again and here we are. I know I can't change the past now, but it's just so incredibly frustrating. If anyone else has experienced anything similar, I would really appreciate the perspective. Feeling incredibly down.
Not sure how many others here have attempted to ride the markets to expedite themselves from HENRY to Lean/Chubby, but it clearly has not worked in my favor. I really thought the market was my way “out” of the grind and flew too close to the sun.
Any advice for how to go forward?
​
EDIT: Got really lost in the weeds and fixated too much on peak to trough… I went back and charted my net worth throughout the entirety of the last two years to gain better perspective.
Net Worth Jan 2021: 275k (135k taxable brokerage, $0 SEP IRA, 140k cash)
Net Worth June 2021: 350k (270k taxable brokerage, 56k SEP IRA, 25k cash)
Net Worth Jan 2022: 700k (500k taxable brokerage, 80k SEP IRA, 120k cash)
Net Worth June 2022: 450k (300k taxable brokerage, 110k SEP IRA, 40k cash)
Net Worth Jan 2023: 510k (240k taxable brokerage, 105k SEP IRA, 165k cash)
Net Worth June 2023: 460k (210k taxable brokerage, 185k SEP IRA, 65k cash)
All of the speculative gains from 2021 are gone now... big jump Jan 2021 - June 2021 from all of the hyped up plays at the time like call options and Gamestop. Also pretty hefty tax bill paid April 2022 for 2021 gains. But it seems like things are relatively flat… So all in all, at least I didn’t “squander away” the financial opportunity that the business created. Otherwise I would have a lifetime of regrets.
I really want to thank everyone who responded. I‘m going to go slow and boring for the foreseeable future. Will probably set aside a small amount to experiment with, as financial markets are still really interesting to me, but it will take a back seat to the rest of medical training and going back to nurture my business that I’ve neglected.

Original Source: https://boringmoney.in/p/byjus-is-sued-by-its-lenders (my newsletter Boring Money -- please visit the link if you'd like to subscribe and receive similar posts in your inbox)
--
Four years ago I read an article in The Ken titled The making of a loan crisis at Byju’s. The gist of the story was that Byju’s was an edtech doing phenomenally well selling its digital courses to parents of young students. But these courses were expensive and these parents were poor. So it was also selling them loans to buy these courses. Only, without telling them. Parents would expect a course (which could be cancelled) but would end up with a loan (which couldn’t be cancelled).
Three days ago, Byju’s went to court in New York. Here’s the headline from TechCrunch: Byju’s sues ‘predatory’ lenders on $1.2B term loan, won’t make further payments.
Byju’s is a company that, arguably, made a business out of giving out predatory loans. Now it’s sued its own lenders and accused them of being predatory. I’m not saying that this is poetic justice but.. okay, scratch that. This is poetic justice! If Shakespeare were a finance writer this is the kind of stuff he would come up with.
Everyone wants to lend to Byju’s
In 2021, interest rates were low, loans were cheap. Tech startups were doing great, edtech startups were crushing it. Byju’s, not one to be left behind, had raised a lot of money but money was cheap so it also wanted to borrow. It wanted a $500 million loan from lenders in the US, which it wanted to use to acquire companies there. Instead, it ended up borrowing more than double—$1.2 billion—because lenders practically wanted to throw money at this overachieving edtech startup from India. [1]
The way a term loan such as this works is:

1. A company goes to an investment bank and asks for a loan
2. The bank syndicates this loan to investors, who become the lenders. Everyone comes together in a room and negotiates the specifics of the loan (which can be quite complex, as we’ll see)
3. The loan goes through and everyone’s happy. Presumably, the company likes its lenders, the lenders like the company
4. The original investors might sell the loans they own to other investors. The company’s only talking to an administrative agent representing the lenders, so over time it might not even know who its lenders are

In November 2021, prominent investment managers such as Blackstone, Fidelity and GIC had gone overboard to lend money to Byju’s. By September 2022, Byju’s lenders were desperately selling [2] their loans at a 36% discount on the principal. (Today, Byju’s debt is at a 20% discount, which is also bad.)
It’s likely that Blackstone, Fidelity and other of the OG lenders aren’t Byju’s’ lenders any more. They’ve almost certainly sold off their loans at a loss. Better get paid something than get paid nothing.
Dealers of the dead
If a company’s debt is being sold at a 36% discount, it’s because investors think that the company is unlikely to repay its loans. If you buy such a loan, you potentially stand to gain a lot—because of the discount—but well, you might also just lose everything.
If you’re a regular investment management company, like Blackstone, you don’t want to invest in such a loan. Your investors gave you this money to get predictable returns. If they wanted risk, they’d ask you to buy stocks. You don’t want to get into a fight with your borrower. If you feel they will not pay you back, you take a loss, sell the loans, move on.
If you’re a distressed debt investor, your entire business is to buy such distressed loans from regular investment managers like Blackstone. You’re going to get nasty borrowers who are unlikely to want to repay their loans but that’s okay. Because you’re nasty too. You spend less time on financial models, more in courts and around lawyers. You like to fight to get your money back. Sometimes you might lose, but the times you win, you win big. The wins cover your losses and some more.
Blackstone and the others sold Byju’s’ loans in desperation, and they were almost certainly bought by distressed debt investors. We don’t know who they are exactly, but Byju’s has indicated that one of them is Redwood Capital, a New York-based distressed debt investor.
If you’re a distressed debt investor, this is how it works:

1. You get a loan for super cheap
2. If the company repays its loan, great! You make a lot of money
3. But the company isn’t likely to repay, which is why you got the loan for cheap in the first place
4. So it’s in your best interest to not let the company die a slow death. Instead, you want to kill the company quick. You take the company to court ASAP and take all the money you’re owed while it’s still there

If the new investors waited, say, for a year, and took Byju’s to court after it had actually defaulted on its repayments—there might not be any money left! Byju’s may have given all the money to Lionel Messi or maybe laundered it away someplace the lenders wouldn’t find it. If you’re a distressed debt investor, you want to get Byju’s to court and get the court to force it to do whatever it takes to pay you back.
Last month, Byju’s’ new lenders sued Byju’s in the Delaware Court of Chancery [3]. We’ll get to the official reasons for this lawsuit in a bit, but what’s important is that Byju’s was not being sued because it defaulted on a payment. It hadn’t. It was being sued because the distressed debt investors expect it to default sooner or later, and they would prefer dealing with it sooner rather than later.
Lenders go for the kill
Usually, the finer details of corporate loans such as Byju’s’ aren’t public. But thanks to the multiple lawsuits we know quite a bit here.
The loan was made to Byju’s’ US entity and it was secured with guarantees from multiple Byju’s companies. From Byju’s’ lawsuit this week against its creditors (which I will get to), here are the guarantors:

1. Byju’s entities in India and Singapore
2. Byju’s’ US and Singapore acquisitions; companies including Oros, Epic, Great Learning, and Neuron
3. Whitehat India, Byju’s’ famous Indian acquisition

That’s a lot of companies guaranteeing a loan! Byju’s’ Indian entity is the parent of all the other guarantor companies, so having it as a guarantor should’ve been enough. I guess the rationale here was that it would be nice to have some non-Indian companies in the mix too, we do know how efficiently Indian courts work.
Apart from Byju’s the parent company itself, Whitehat was the only other Indian company guaranteeing this loan. The problem was that Whitehat itself, on paper, had negative net worth. It had probably taken loans of its own and did not have enough assets to cover them. In practice, this would be irrelevant, because Whitehat was owned by Byju’s and it would cover any of Whitehat’s liabilities. But, apparently, RBI regulations require Indian companies with negative net worth to take its approval before guaranteeing a loan. So even though Whitehat was a guarantor, the guarantee was meaningless until RBI granted its approval.
Yeah, well, RBI didn’t grant its approval. From the lawsuit:

Plaintiffs, Borrower, and Lenders had a call on or around October 6, 2022, to discuss the Whitehat Guarantee. In a good faith effort to negate any impact of the new regulations, Plaintiffs and the Borrower offered to move all assets out of Whitehat India into other subsidiaries of the Parent Guarantor that are Guarantors to the Credit Agreement, or are owned by Guarantors of the Credit Agreement. Lenders rejected this proposal without justification.

In October 2022, after Byju’s’ debt was already sold to the distressed debt investors, the company spoke to its lenders and informed them that it was unable to get RBI’s approval for Whitehat to be a guarantor. Instead, it offered to move Whitehat’s assets into other companies and then use those companies to guarantee the loan. Which would really have been the same thing. But the lenders refused! Why?!
Continuing from the lawsuit:

Lenders subsequently asserted that an event of default under Section 8.1(e) of the Credit Agreement (an “Event of Default”) had occurred due to the failure to procure the Whitehat Guarantee.

Oh, that’s why. Byju’s’ lenders—distressed debt investors that wanted Byju’s dead ASAP—used the fact that Whitehat couldn’t be a guarantor of this loan to claim a default and use it as a reason to take Byju’s to court in the US. Honestly, I’m impressed. The Whitehat guarantee was redundant to begin with, but the lenders had found an out and their official reason #1 to take Byju’s to court.
Oh, there’s another thing. In June 2022, The Ken reported that Byju’s’ financials for 2021 had been held up by its auditors because of certain, umm, creative accounting. By this time, Byju’s should have ideally filed even its 2022 financials. It was very late! From the lawsuit:

The FY’21 Audit was delivered to the Lenders on August 30, 2022. It did not contain a “going concern” qualification or any similar qualifications about the Parent Guarantor’s ability to continue into the future. However, the FY’22 Audit could not begin until the FY’21 Audit had been completed, and the Parent Guarantor’s business has continued to grow rapidly

Byju’s’ 2021 financials were held up because auditors weren’t giving the company their go ahead, so of course its 2022 financials were held up as well.

On or around August 29, 2022, Shearman & Sterling, LLP (“S&S”), counsel for GLAS, sent a letter to Byju’s Alpha and Think & Learn requesting certain financial disclosures from Plaintiffs and Borrower, and asserting that the failure to deliver this financial information was a breach of the Credit Agreement. ... Rather than actually suffering any damage from the delayed FY’22 audit, Lenders opportunistically used this unintentional and non-material delay to exert pressure on Plaintiffs and the Borrower to extract onerous economic concessions.

I love it! Byju’s’ financials were delayed. Its agreement with the original lenders said that the company must share its audited financials with them. Byju’s wasn’t able to do that. The lenders found their official reason #2 to take Byju’s to court.
Byju’s sets up an offence
Before the lenders sued Byju’s last month, Byju’s tried its best to negotiate a deal. It gave the lenders an assurance of the company’s financial health, gave them concessions worth “tens of millions of dollars” and requested (pleaded) to take back their claims of Byju’s defaulting.
The lenders refused. They asked for either the full principal back or two-thirds of it, with an increment of 7% (!!) in the interest rate. Byju’s, of course, said no.
At this point, Byju’s knew that the lenders weren’t going to negotiate realistically. So it prepared its own offence. From the lawsuit:

The Credit Agreement prohibits transfers or assignments of the Lenders’ interests in the Term Loans to “Disqualified Lenders.” The Credit Agreement includes in its definition of Disqualified Lender “[a]ny [] Person (including an Affiliate or Approved Fund of a Lender) whose primary activity is the trading or acquisition of distressed debt,” and “those banks, financial institutions and other Persons separately identified by name . . . on or before the syndication . . . (which may be updated . . . from time to time . . .)”

In its agreement with the original lenders, Byju’s had put in a clause restricting its loan from being transferred to distressed debt investors. This is a risky clause to agree with, because it’s only these folks that buy loans that turn sour, but the original lenders had gone with it.

On information and belief, the entire course of Lenders’, and Defendant’s, bad-faith conduct has been driven by these distressed-debt lenders, who were never meant to have been lenders in the first place, and who acted with the intent of causing harm to Borrower and Plaintiffs. Meanwhile, Borrowers and Plaintiffs were initially unaware that the lenders were in fact being controlled by distressed debt dealers, and were therefore unable to take action to prevent their bad-faith plan from being implemented.

In its lawsuit this week, the crux of Byju’s’ argument is based on the fact that its loan is owned by distressed debt investors who were not eligible to be owning its debt in the first place. Also interesting is that Byju’s doesn’t seem to know who these lenders are. In its post-lawsuit statement, Byju’s named Redwood as one of the lenders, but it’s not named anywhere in the lawsuit.
Now what?
If push comes to shove, does Byju’s have the cash to pay off its lenders?
Last month, Byju’s transferred $500 million out of its US entity. The lenders had filed their lawsuit and there was a chance the court would freeze Byju’s’ US entity’s assets, so this was a precautionary move. So Byju’s has this $500 million. But that seems about it. Byju’s has been in the news saying that it’s trying to raise $700 million to pay off its debt. Yeah, between the horrible edtech market and the colourful lawsuits Byju’s is in, good luck with getting investors to donate their money to Byju’s.
But of course, Byju’s is now suing its lenders too. It does have an agreement that says that its debt can’t be held by distressed debt investors. So it’s not a frivolous suit.
Can Byju’s win? Sure. It would still have to pay its debt eventually. And it’s not straightforward. There are probably tens or even hundreds of lenders. It’s apparent that the distressed debt investors are the guiding force behind the lenders’ lawsuit, but it’s definitely not necessary that they form the majority of the lenders. In which case, Byju’s’ whole lawsuit falls apart.
The lenders are saying Byju’s defaulted by not keeping its part of the agreement, even though it had technically paid its dues. [4] Byju’s is saying that the lenders shouldn’t be the lenders in the first place and must be disqualified. We’ll see who’s right.
Footnotes
[1] It was a 5-year loan with a floating interest rate of 6% over Libor. Think of it as 6% over this magical interest-rate called Libor that some fancy-pants banks set amongst themselves everyday. Back in November 2021, Libor was at 0.25% and this was a 6.86% interest loan for Byju’s (the floor for Libor was 0.75%). Today, Libor is at about 5.64% and it’s an 11.6% loan.
[2] Multiple reasons for the investors to sell. One, interest rates went up and cash became more dear. If they had money stuck with Byju’s, it was money not being lent out to someone else. Second, edtech all around the world was in trouble. Kids were back in school and people didn’t think much of them anymore. Third, Byju’s as a company was showing its red flags.
[3] What a cool name!
[4] Until now, that is. Byju’s filed its lawsuit this week the same day it was supposed to make a $40 million interest payment.
Original Source: https://boringmoney.in/p/byjus-is-sued-by-its-lenders

Original Source: https://boringmoney.in/p/byjus-is-sued-by-its-lenders (my newsletter Boring Money -- please visit the link if you'd like to subscribe and receive similar posts in your inbox)
--
Four years ago I read an article in The Ken titled The making of a loan crisis at Byju’s. The gist of the story was that Byju’s was an edtech doing phenomenally well selling its digital courses to parents of young students. But these courses were expensive and these parents were poor. So it was also selling them loans to buy these courses. Only, without telling them. Parents would expect a course (which could be cancelled) but would end up with a loan (which couldn’t be cancelled).
Three days ago, Byju’s went to court in New York. Here’s the headline from TechCrunch: Byju’s sues ‘predatory’ lenders on $1.2B term loan, won’t make further payments.
Byju’s is a company that, arguably, made a business out of giving out predatory loans. Now it’s sued its own lenders and accused them of being predatory. I’m not saying that this is poetic justice but.. okay, scratch that. This is poetic justice! If Shakespeare were a finance writer this is the kind of stuff he would come up with.
Everyone wants to lend to Byju’s
In 2021, interest rates were low, loans were cheap. Tech startups were doing great, edtech startups were crushing it. Byju’s, not one to be left behind, had raised a lot of money but money was cheap so it also wanted to borrow. It wanted a $500 million loan from lenders in the US, which it wanted to use to acquire companies there. Instead, it ended up borrowing more than double—$1.2 billion—because lenders practically wanted to throw money at this overachieving edtech startup from India. [1]
The way a term loan such as this works is:

1. A company goes to an investment bank and asks for a loan
2. The bank syndicates this loan to investors, who become the lenders. Everyone comes together in a room and negotiates the specifics of the loan (which can be quite complex, as we’ll see)
3. The loan goes through and everyone’s happy. Presumably, the company likes its lenders, the lenders like the company
4. The original investors might sell the loans they own to other investors. The company’s only talking to an administrative agent representing the lenders, so over time it might not even know who its lenders are

In November 2021, prominent investment managers such as Blackstone, Fidelity and GIC had gone overboard to lend money to Byju’s. By September 2022, Byju’s lenders were desperately selling [2] their loans at a 36% discount on the principal. (Today, Byju’s debt is at a 20% discount, which is also bad.)
It’s likely that Blackstone, Fidelity and other of the OG lenders aren’t Byju’s’ lenders any more. They’ve almost certainly sold off their loans at a loss. Better get paid something than get paid nothing.
Dealers of the dead
If a company’s debt is being sold at a 36% discount, it’s because investors think that the company is unlikely to repay its loans. If you buy such a loan, you potentially stand to gain a lot—because of the discount—but well, you might also just lose everything.
If you’re a regular investment management company, like Blackstone, you don’t want to invest in such a loan. Your investors gave you this money to get predictable returns. If they wanted risk, they’d ask you to buy stocks. You don’t want to get into a fight with your borrower. If you feel they will not pay you back, you take a loss, sell the loans, move on.
If you’re a distressed debt investor, your entire business is to buy such distressed loans from regular investment managers like Blackstone. You’re going to get nasty borrowers who are unlikely to want to repay their loans but that’s okay. Because you’re nasty too. You spend less time on financial models, more in courts and around lawyers. You like to fight to get your money back. Sometimes you might lose, but the times you win, you win big. The wins cover your losses and some more.
Blackstone and the others sold Byju’s’ loans in desperation, and they were almost certainly bought by distressed debt investors. We don’t know who they are exactly, but Byju’s has indicated that one of them is Redwood Capital, a New York-based distressed debt investor.
If you’re a distressed debt investor, this is how it works:

1. You get a loan for super cheap
2. If the company repays its loan, great! You make a lot of money
3. But the company isn’t likely to repay, which is why you got the loan for cheap in the first place
4. So it’s in your best interest to not let the company die a slow death. Instead, you want to kill the company quick. You take the company to court ASAP and take all the money you’re owed while it’s still there

If the new investors waited, say, for a year, and took Byju’s to court after it had actually defaulted on its repayments—there might not be any money left! Byju’s may have given all the money to Lionel Messi or maybe laundered it away someplace the lenders wouldn’t find it. If you’re a distressed debt investor, you want to get Byju’s to court and get the court to force it to do whatever it takes to pay you back.
Last month, Byju’s’ new lenders sued Byju’s in the Delaware Court of Chancery [3]. We’ll get to the official reasons for this lawsuit in a bit, but what’s important is that Byju’s was not being sued because it defaulted on a payment. It hadn’t. It was being sued because the distressed debt investors expect it to default sooner or later, and they would prefer dealing with it sooner rather than later.
Lenders go for the kill
Usually, the finer details of corporate loans such as Byju’s’ aren’t public. But thanks to the multiple lawsuits we know quite a bit here.
The loan was made to Byju’s’ US entity and it was secured with guarantees from multiple Byju’s companies. From Byju’s’ lawsuit this week against its creditors (which I will get to), here are the guarantors:

1. Byju’s entities in India and Singapore
2. Byju’s’ US and Singapore acquisitions; companies including Oros, Epic, Great Learning, and Neuron
3. Whitehat India, Byju’s’ famous Indian acquisition

That’s a lot of companies guaranteeing a loan! Byju’s’ Indian entity is the parent of all the other guarantor companies, so having it as a guarantor should’ve been enough. I guess the rationale here was that it would be nice to have some non-Indian companies in the mix too, we do know how efficiently Indian courts work.
Apart from Byju’s the parent company itself, Whitehat was the only other Indian company guaranteeing this loan. The problem was that Whitehat itself, on paper, had negative net worth. It had probably taken loans of its own and did not have enough assets to cover them. In practice, this would be irrelevant, because Whitehat was owned by Byju’s and it would cover any of Whitehat’s liabilities. But, apparently, RBI regulations require Indian companies with negative net worth to take its approval before guaranteeing a loan. So even though Whitehat was a guarantor, the guarantee was meaningless until RBI granted its approval.
Yeah, well, RBI didn’t grant its approval. From the lawsuit:

Plaintiffs, Borrower, and Lenders had a call on or around October 6, 2022, to discuss the Whitehat Guarantee. In a good faith effort to negate any impact of the new regulations, Plaintiffs and the Borrower offered to move all assets out of Whitehat India into other subsidiaries of the Parent Guarantor that are Guarantors to the Credit Agreement, or are owned by Guarantors of the Credit Agreement. Lenders rejected this proposal without justification.

In October 2022, after Byju’s’ debt was already sold to the distressed debt investors, the company spoke to its lenders and informed them that it was unable to get RBI’s approval for Whitehat to be a guarantor. Instead, it offered to move Whitehat’s assets into other companies and then use those companies to guarantee the loan. Which would really have been the same thing. But the lenders refused! Why?!
Continuing from the lawsuit:

Lenders subsequently asserted that an event of default under Section 8.1(e) of the Credit Agreement (an “Event of Default”) had occurred due to the failure to procure the Whitehat Guarantee.

Oh, that’s why. Byju’s’ lenders—distressed debt investors that wanted Byju’s dead ASAP—used the fact that Whitehat couldn’t be a guarantor of this loan to claim a default and use it as a reason to take Byju’s to court in the US. Honestly, I’m impressed. The Whitehat guarantee was redundant to begin with, but the lenders had found an out and their official reason #1 to take Byju’s to court.
Oh, there’s another thing. In June 2022, The Ken reported that Byju’s’ financials for 2021 had been held up by its auditors because of certain, umm, creative accounting. By this time, Byju’s should have ideally filed even its 2022 financials. It was very late! From the lawsuit:

The FY’21 Audit was delivered to the Lenders on August 30, 2022. It did not contain a “going concern” qualification or any similar qualifications about the Parent Guarantor’s ability to continue into the future. However, the FY’22 Audit could not begin until the FY’21 Audit had been completed, and the Parent Guarantor’s business has continued to grow rapidly

Byju’s’ 2021 financials were held up because auditors weren’t giving the company their go ahead, so of course its 2022 financials were held up as well.

On or around August 29, 2022, Shearman & Sterling, LLP (“S&S”), counsel for GLAS, sent a letter to Byju’s Alpha and Think & Learn requesting certain financial disclosures from Plaintiffs and Borrower, and asserting that the failure to deliver this financial information was a breach of the Credit Agreement. ... Rather than actually suffering any damage from the delayed FY’22 audit, Lenders opportunistically used this unintentional and non-material delay to exert pressure on Plaintiffs and the Borrower to extract onerous economic concessions.

I love it! Byju’s’ financials were delayed. Its agreement with the original lenders said that the company must share its audited financials with them. Byju’s wasn’t able to do that. The lenders found their official reason #2 to take Byju’s to court.
Byju’s sets up an offence
Before the lenders sued Byju’s last month, Byju’s tried its best to negotiate a deal. It gave the lenders an assurance of the company’s financial health, gave them concessions worth “tens of millions of dollars” and requested (pleaded) to take back their claims of Byju’s defaulting.
The lenders refused. They asked for either the full principal back or two-thirds of it, with an increment of 7% (!!) in the interest rate. Byju’s, of course, said no.
At this point, Byju’s knew that the lenders weren’t going to negotiate realistically. So it prepared its own offence. From the lawsuit:

The Credit Agreement prohibits transfers or assignments of the Lenders’ interests in the Term Loans to “Disqualified Lenders.” The Credit Agreement includes in its definition of Disqualified Lender “[a]ny [] Person (including an Affiliate or Approved Fund of a Lender) whose primary activity is the trading or acquisition of distressed debt,” and “those banks, financial institutions and other Persons separately identified by name . . . on or before the syndication . . . (which may be updated . . . from time to time . . .)”

In its agreement with the original lenders, Byju’s had put in a clause restricting its loan from being transferred to distressed debt investors. This is a risky clause to agree with, because it’s only these folks that buy loans that turn sour, but the original lenders had gone with it.

On information and belief, the entire course of Lenders’, and Defendant’s, bad-faith conduct has been driven by these distressed-debt lenders, who were never meant to have been lenders in the first place, and who acted with the intent of causing harm to Borrower and Plaintiffs. Meanwhile, Borrowers and Plaintiffs were initially unaware that the lenders were in fact being controlled by distressed debt dealers, and were therefore unable to take action to prevent their bad-faith plan from being implemented.

In its lawsuit this week, the crux of Byju’s’ argument is based on the fact that its loan is owned by distressed debt investors who were not eligible to be owning its debt in the first place. Also interesting is that Byju’s doesn’t seem to know who these lenders are. In its post-lawsuit statement, Byju’s named Redwood as one of the lenders, but it’s not named anywhere in the lawsuit.
Now what?
If push comes to shove, does Byju’s have the cash to pay off its lenders?
Last month, Byju’s transferred $500 million out of its US entity. The lenders had filed their lawsuit and there was a chance the court would freeze Byju’s’ US entity’s assets, so this was a precautionary move. So Byju’s has this $500 million. But that seems about it. Byju’s has been in the news saying that it’s trying to raise $700 million to pay off its debt. Yeah, between the horrible edtech market and the colourful lawsuits Byju’s is in, good luck with getting investors to donate their money to Byju’s.
But of course, Byju’s is now suing its lenders too. It does have an agreement that says that its debt can’t be held by distressed debt investors. So it’s not a frivolous suit.
Can Byju’s win? Sure. It would still have to pay its debt eventually. And it’s not straightforward. There are probably tens or even hundreds of lenders. It’s apparent that the distressed debt investors are the guiding force behind the lenders’ lawsuit, but it’s definitely not necessary that they form the majority of the lenders. In which case, Byju’s’ whole lawsuit falls apart.
The lenders are saying Byju’s defaulted by not keeping its part of the agreement, even though it had technically paid its dues. [4] Byju’s is saying that the lenders shouldn’t be the lenders in the first place and must be disqualified. We’ll see who’s right.
Footnotes
[1] It was a 5-year loan with a floating interest rate of 6% over Libor. Think of it as 6% over this magical interest-rate called Libor that some fancy-pants banks set amongst themselves everyday. Back in November 2021, Libor was at 0.25% and this was a 6.86% interest loan for Byju’s (the floor for Libor was 0.75%). Today, Libor is at about 5.64% and it’s an 11.6% loan.
[2] Multiple reasons for the investors to sell. One, interest rates went up and cash became more dear. If they had money stuck with Byju’s, it was money not being lent out to someone else. Second, edtech all around the world was in trouble. Kids were back in school and people didn’t think much of them anymore. Third, Byju’s as a company was showing its red flags.
[3] What a cool name!
[4] Until now, that is. Byju’s filed its lawsuit this week the same day it was supposed to make a $40 million interest payment.
Original Source: https://boringmoney.in/p/byjus-is-sued-by-its-lenders

Original Source: https://boringmoney.in/p/byjus-is-sued-by-its-lenders (my newsletter Boring Money -- please visit the link if you'd like to subscribe and receive similar posts in your inbox)
--
Four years ago I read an article in The Ken titled The making of a loan crisis at Byju’s. The gist of the story was that Byju’s was an edtech doing phenomenally well selling its digital courses to parents of young students. But these courses were expensive and these parents were poor. So it was also selling them loans to buy these courses. Only, without telling them. Parents would expect a course (which could be cancelled) but would end up with a loan (which couldn’t be cancelled).
Three days ago, Byju’s went to court in New York. Here’s the headline from TechCrunch: Byju’s sues ‘predatory’ lenders on $1.2B term loan, won’t make further payments.
Byju’s is a company that, arguably, made a business out of giving out predatory loans. Now it’s sued its own lenders and accused them of being predatory. I’m not saying that this is poetic justice but.. okay, scratch that. This is poetic justice! If Shakespeare were a finance writer this is the kind of stuff he would come up with.
Everyone wants to lend to Byju’s
In 2021, interest rates were low, loans were cheap. Tech startups were doing great, edtech startups were crushing it. Byju’s, not one to be left behind, had raised a lot of money but money was cheap so it also wanted to borrow. It wanted a $500 million loan from lenders in the US, which it wanted to use to acquire companies there. Instead, it ended up borrowing more than double—$1.2 billion—because lenders practically wanted to throw money at this overachieving edtech startup from India. [1]
The way a term loan such as this works is:

1. A company goes to an investment bank and asks for a loan
2. The bank syndicates this loan to investors, who become the lenders. Everyone comes together in a room and negotiates the specifics of the loan (which can be quite complex, as we’ll see)
3. The loan goes through and everyone’s happy. Presumably, the company likes its lenders, the lenders like the company
4. The original investors might sell the loans they own to other investors. The company’s only talking to an administrative agent representing the lenders, so over time it might not even know who its lenders are

In November 2021, prominent investment managers such as Blackstone, Fidelity and GIC had gone overboard to lend money to Byju’s. By September 2022, Byju’s lenders were desperately selling [2] their loans at a 36% discount on the principal. (Today, Byju’s debt is at a 20% discount, which is also bad.)
It’s likely that Blackstone, Fidelity and other of the OG lenders aren’t Byju’s’ lenders any more. They’ve almost certainly sold off their loans at a loss. Better get paid something than get paid nothing.
Dealers of the dead
If a company’s debt is being sold at a 36% discount, it’s because investors think that the company is unlikely to repay its loans. If you buy such a loan, you potentially stand to gain a lot—because of the discount—but well, you might also just lose everything.
If you’re a regular investment management company, like Blackstone, you don’t want to invest in such a loan. Your investors gave you this money to get predictable returns. If they wanted risk, they’d ask you to buy stocks. You don’t want to get into a fight with your borrower. If you feel they will not pay you back, you take a loss, sell the loans, move on.
If you’re a distressed debt investor, your entire business is to buy such distressed loans from regular investment managers like Blackstone. You’re going to get nasty borrowers who are unlikely to want to repay their loans but that’s okay. Because you’re nasty too. You spend less time on financial models, more in courts and around lawyers. You like to fight to get your money back. Sometimes you might lose, but the times you win, you win big. The wins cover your losses and some more.
Blackstone and the others sold Byju’s’ loans in desperation, and they were almost certainly bought by distressed debt investors. We don’t know who they are exactly, but Byju’s has indicated that one of them is Redwood Capital, a New York-based distressed debt investor.
If you’re a distressed debt investor, this is how it works:

1. You get a loan for super cheap
2. If the company repays its loan, great! You make a lot of money
3. But the company isn’t likely to repay, which is why you got the loan for cheap in the first place
4. So it’s in your best interest to not let the company die a slow death. Instead, you want to kill the company quick. You take the company to court ASAP and take all the money you’re owed while it’s still there

If the new investors waited, say, for a year, and took Byju’s to court after it had actually defaulted on its repayments—there might not be any money left! Byju’s may have given all the money to Lionel Messi or maybe laundered it away someplace the lenders wouldn’t find it. If you’re a distressed debt investor, you want to get Byju’s to court and get the court to force it to do whatever it takes to pay you back.
Last month, Byju’s’ new lenders sued Byju’s in the Delaware Court of Chancery [3]. We’ll get to the official reasons for this lawsuit in a bit, but what’s important is that Byju’s was not being sued because it defaulted on a payment. It hadn’t. It was being sued because the distressed debt investors expect it to default sooner or later, and they would prefer dealing with it sooner rather than later.
Lenders go for the kill
Usually, the finer details of corporate loans such as Byju’s’ aren’t public. But thanks to the multiple lawsuits we know quite a bit here.
The loan was made to Byju’s’ US entity and it was secured with guarantees from multiple Byju’s companies. From Byju’s’ lawsuit this week against its creditors (which I will get to), here are the guarantors:

1. Byju’s entities in India and Singapore
2. Byju’s’ US and Singapore acquisitions; companies including Oros, Epic, Great Learning, and Neuron
3. Whitehat India, Byju’s’ famous Indian acquisition

That’s a lot of companies guaranteeing a loan! Byju’s’ Indian entity is the parent of all the other guarantor companies, so having it as a guarantor should’ve been enough. I guess the rationale here was that it would be nice to have some non-Indian companies in the mix too, we do know how efficiently Indian courts work.
Apart from Byju’s the parent company itself, Whitehat was the only other Indian company guaranteeing this loan. The problem was that Whitehat itself, on paper, had negative net worth. It had probably taken loans of its own and did not have enough assets to cover them. In practice, this would be irrelevant, because Whitehat was owned by Byju’s and it would cover any of Whitehat’s liabilities. But, apparently, RBI regulations require Indian companies with negative net worth to take its approval before guaranteeing a loan. So even though Whitehat was a guarantor, the guarantee was meaningless until RBI granted its approval.
Yeah, well, RBI didn’t grant its approval. From the lawsuit:

Plaintiffs, Borrower, and Lenders had a call on or around October 6, 2022, to discuss the Whitehat Guarantee. In a good faith effort to negate any impact of the new regulations, Plaintiffs and the Borrower offered to move all assets out of Whitehat India into other subsidiaries of the Parent Guarantor that are Guarantors to the Credit Agreement, or are owned by Guarantors of the Credit Agreement. Lenders rejected this proposal without justification.

In October 2022, after Byju’s’ debt was already sold to the distressed debt investors, the company spoke to its lenders and informed them that it was unable to get RBI’s approval for Whitehat to be a guarantor. Instead, it offered to move Whitehat’s assets into other companies and then use those companies to guarantee the loan. Which would really have been the same thing. But the lenders refused! Why?!
Continuing from the lawsuit:

Lenders subsequently asserted that an event of default under Section 8.1(e) of the Credit Agreement (an “Event of Default”) had occurred due to the failure to procure the Whitehat Guarantee.

Oh, that’s why. Byju’s’ lenders—distressed debt investors that wanted Byju’s dead ASAP—used the fact that Whitehat couldn’t be a guarantor of this loan to claim a default and use it as a reason to take Byju’s to court in the US. Honestly, I’m impressed. The Whitehat guarantee was redundant to begin with, but the lenders had found an out and their official reason #1 to take Byju’s to court.
Oh, there’s another thing. In June 2022, The Ken reported that Byju’s’ financials for 2021 had been held up by its auditors because of certain, umm, creative accounting. By this time, Byju’s should have ideally filed even its 2022 financials. It was very late! From the lawsuit:

The FY’21 Audit was delivered to the Lenders on August 30, 2022. It did not contain a “going concern” qualification or any similar qualifications about the Parent Guarantor’s ability to continue into the future. However, the FY’22 Audit could not begin until the FY’21 Audit had been completed, and the Parent Guarantor’s business has continued to grow rapidly

Byju’s’ 2021 financials were held up because auditors weren’t giving the company their go ahead, so of course its 2022 financials were held up as well.

On or around August 29, 2022, Shearman & Sterling, LLP (“S&S”), counsel for GLAS, sent a letter to Byju’s Alpha and Think & Learn requesting certain financial disclosures from Plaintiffs and Borrower, and asserting that the failure to deliver this financial information was a breach of the Credit Agreement. ... Rather than actually suffering any damage from the delayed FY’22 audit, Lenders opportunistically used this unintentional and non-material delay to exert pressure on Plaintiffs and the Borrower to extract onerous economic concessions.

I love it! Byju’s’ financials were delayed. Its agreement with the original lenders said that the company must share its audited financials with them. Byju’s wasn’t able to do that. The lenders found their official reason #2 to take Byju’s to court.
Byju’s sets up an offence
Before the lenders sued Byju’s last month, Byju’s tried its best to negotiate a deal. It gave the lenders an assurance of the company’s financial health, gave them concessions worth “tens of millions of dollars” and requested (pleaded) to take back their claims of Byju’s defaulting.
The lenders refused. They asked for either the full principal back or two-thirds of it, with an increment of 7% (!!) in the interest rate. Byju’s, of course, said no.
At this point, Byju’s knew that the lenders weren’t going to negotiate realistically. So it prepared its own offence. From the lawsuit:

The Credit Agreement prohibits transfers or assignments of the Lenders’ interests in the Term Loans to “Disqualified Lenders.” The Credit Agreement includes in its definition of Disqualified Lender “[a]ny [] Person (including an Affiliate or Approved Fund of a Lender) whose primary activity is the trading or acquisition of distressed debt,” and “those banks, financial institutions and other Persons separately identified by name . . . on or before the syndication . . . (which may be updated . . . from time to time . . .)”

In its agreement with the original lenders, Byju’s had put in a clause restricting its loan from being transferred to distressed debt investors. This is a risky clause to agree with, because it’s only these folks that buy loans that turn sour, but the original lenders had gone with it.

On information and belief, the entire course of Lenders’, and Defendant’s, bad-faith conduct has been driven by these distressed-debt lenders, who were never meant to have been lenders in the first place, and who acted with the intent of causing harm to Borrower and Plaintiffs. Meanwhile, Borrowers and Plaintiffs were initially unaware that the lenders were in fact being controlled by distressed debt dealers, and were therefore unable to take action to prevent their bad-faith plan from being implemented.

In its lawsuit this week, the crux of Byju’s’ argument is based on the fact that its loan is owned by distressed debt investors who were not eligible to be owning its debt in the first place. Also interesting is that Byju’s doesn’t seem to know who these lenders are. In its post-lawsuit statement, Byju’s named Redwood as one of the lenders, but it’s not named anywhere in the lawsuit.
Now what?
If push comes to shove, does Byju’s have the cash to pay off its lenders?
Last month, Byju’s transferred $500 million out of its US entity. The lenders had filed their lawsuit and there was a chance the court would freeze Byju’s’ US entity’s assets, so this was a precautionary move. So Byju’s has this $500 million. But that seems about it. Byju’s has been in the news saying that it’s trying to raise $700 million to pay off its debt. Yeah, between the horrible edtech market and the colourful lawsuits Byju’s is in, good luck with getting investors to donate their money to Byju’s.
But of course, Byju’s is now suing its lenders too. It does have an agreement that says that its debt can’t be held by distressed debt investors. So it’s not a frivolous suit.
Can Byju’s win? Sure. It would still have to pay its debt eventually. And it’s not straightforward. There are probably tens or even hundreds of lenders. It’s apparent that the distressed debt investors are the guiding force behind the lenders’ lawsuit, but it’s definitely not necessary that they form the majority of the lenders. In which case, Byju’s’ whole lawsuit falls apart.
The lenders are saying Byju’s defaulted by not keeping its part of the agreement, even though it had technically paid its dues. [4] Byju’s is saying that the lenders shouldn’t be the lenders in the first place and must be disqualified. We’ll see who’s right.
Footnotes
[1] It was a 5-year loan with a floating interest rate of 6% over Libor. Think of it as 6% over this magical interest-rate called Libor that some fancy-pants banks set amongst themselves everyday. Back in November 2021, Libor was at 0.25% and this was a 6.86% interest loan for Byju’s (the floor for Libor was 0.75%). Today, Libor is at about 5.64% and it’s an 11.6% loan.
[2] Multiple reasons for the investors to sell. One, interest rates went up and cash became more dear. If they had money stuck with Byju’s, it was money not being lent out to someone else. Second, edtech all around the world was in trouble. Kids were back in school and people didn’t think much of them anymore. Third, Byju’s as a company was showing its red flags.
[3] What a cool name!
[4] Until now, that is. Byju’s filed its lawsuit this week the same day it was supposed to make a $40 million interest payment.
Original Source: https://boringmoney.in/p/byjus-is-sued-by-its-lenders

Original Source: https://boringmoney.in/p/byjus-is-sued-by-its-lenders (my newsletter Boring Money -- please visit the link if you'd like to subscribe and receive similar posts in your inbox)
--
Four years ago I read an article in The Ken titled The making of a loan crisis at Byju’s. The gist of the story was that Byju’s was an edtech doing phenomenally well selling its digital courses to parents of young students. But these courses were expensive and these parents were poor. So it was also selling them loans to buy these courses. Only, without telling them. Parents would expect a course (which could be cancelled) but would end up with a loan (which couldn’t be cancelled).
Three days ago, Byju’s went to court in New York. Here’s the headline from TechCrunch: Byju’s sues ‘predatory’ lenders on $1.2B term loan, won’t make further payments.
Byju’s is a company that, arguably, made a business out of giving out predatory loans. Now it’s sued its own lenders and accused them of being predatory. I’m not saying that this is poetic justice but.. okay, scratch that. This is poetic justice! If Shakespeare were a finance writer this is the kind of stuff he would come up with.
Everyone wants to lend to Byju’s
In 2021, interest rates were low, loans were cheap. Tech startups were doing great, edtech startups were crushing it. Byju’s, not one to be left behind, had raised a lot of money but money was cheap so it also wanted to borrow. It wanted a $500 million loan from lenders in the US, which it wanted to use to acquire companies there. Instead, it ended up borrowing more than double—$1.2 billion—because lenders practically wanted to throw money at this overachieving edtech startup from India. [1]
The way a term loan such as this works is:

1. A company goes to an investment bank and asks for a loan
2. The bank syndicates this loan to investors, who become the lenders. Everyone comes together in a room and negotiates the specifics of the loan (which can be quite complex, as we’ll see)
3. The loan goes through and everyone’s happy. Presumably, the company likes its lenders, the lenders like the company
4. The original investors might sell the loans they own to other investors. The company’s only talking to an administrative agent representing the lenders, so over time it might not even know who its lenders are

In November 2021, prominent investment managers such as Blackstone, Fidelity and GIC had gone overboard to lend money to Byju’s. By September 2022, Byju’s lenders were desperately selling [2] their loans at a 36% discount on the principal. (Today, Byju’s debt is at a 20% discount, which is also bad.)
It’s likely that Blackstone, Fidelity and other of the OG lenders aren’t Byju’s’ lenders any more. They’ve almost certainly sold off their loans at a loss. Better get paid something than get paid nothing.
Dealers of the dead
If a company’s debt is being sold at a 36% discount, it’s because investors think that the company is unlikely to repay its loans. If you buy such a loan, you potentially stand to gain a lot—because of the discount—but well, you might also just lose everything.
If you’re a regular investment management company, like Blackstone, you don’t want to invest in such a loan. Your investors gave you this money to get predictable returns. If they wanted risk, they’d ask you to buy stocks. You don’t want to get into a fight with your borrower. If you feel they will not pay you back, you take a loss, sell the loans, move on.
If you’re a distressed debt investor, your entire business is to buy such distressed loans from regular investment managers like Blackstone. You’re going to get nasty borrowers who are unlikely to want to repay their loans but that’s okay. Because you’re nasty too. You spend less time on financial models, more in courts and around lawyers. You like to fight to get your money back. Sometimes you might lose, but the times you win, you win big. The wins cover your losses and some more.
Blackstone and the others sold Byju’s’ loans in desperation, and they were almost certainly bought by distressed debt investors. We don’t know who they are exactly, but Byju’s has indicated that one of them is Redwood Capital, a New York-based distressed debt investor.
If you’re a distressed debt investor, this is how it works:

1. You get a loan for super cheap
2. If the company repays its loan, great! You make a lot of money
3. But the company isn’t likely to repay, which is why you got the loan for cheap in the first place
4. So it’s in your best interest to not let the company die a slow death. Instead, you want to kill the company quick. You take the company to court ASAP and take all the money you’re owed while it’s still there

If the new investors waited, say, for a year, and took Byju’s to court after it had actually defaulted on its repayments—there might not be any money left! Byju’s may have given all the money to Lionel Messi or maybe laundered it away someplace the lenders wouldn’t find it. If you’re a distressed debt investor, you want to get Byju’s to court and get the court to force it to do whatever it takes to pay you back.
Last month, Byju’s’ new lenders sued Byju’s in the Delaware Court of Chancery [3]. We’ll get to the official reasons for this lawsuit in a bit, but what’s important is that Byju’s was not being sued because it defaulted on a payment. It hadn’t. It was being sued because the distressed debt investors expect it to default sooner or later, and they would prefer dealing with it sooner rather than later.
Lenders go for the kill
Usually, the finer details of corporate loans such as Byju’s’ aren’t public. But thanks to the multiple lawsuits we know quite a bit here.
The loan was made to Byju’s’ US entity and it was secured with guarantees from multiple Byju’s companies. From Byju’s’ lawsuit this week against its creditors (which I will get to), here are the guarantors:

1. Byju’s entities in India and Singapore
2. Byju’s’ US and Singapore acquisitions; companies including Oros, Epic, Great Learning, and Neuron
3. Whitehat India, Byju’s’ famous Indian acquisition

That’s a lot of companies guaranteeing a loan! Byju’s’ Indian entity is the parent of all the other guarantor companies, so having it as a guarantor should’ve been enough. I guess the rationale here was that it would be nice to have some non-Indian companies in the mix too, we do know how efficiently Indian courts work.
Apart from Byju’s the parent company itself, Whitehat was the only other Indian company guaranteeing this loan. The problem was that Whitehat itself, on paper, had negative net worth. It had probably taken loans of its own and did not have enough assets to cover them. In practice, this would be irrelevant, because Whitehat was owned by Byju’s and it would cover any of Whitehat’s liabilities. But, apparently, RBI regulations require Indian companies with negative net worth to take its approval before guaranteeing a loan. So even though Whitehat was a guarantor, the guarantee was meaningless until RBI granted its approval.
Yeah, well, RBI didn’t grant its approval. From the lawsuit:

Plaintiffs, Borrower, and Lenders had a call on or around October 6, 2022, to discuss the Whitehat Guarantee. In a good faith effort to negate any impact of the new regulations, Plaintiffs and the Borrower offered to move all assets out of Whitehat India into other subsidiaries of the Parent Guarantor that are Guarantors to the Credit Agreement, or are owned by Guarantors of the Credit Agreement. Lenders rejected this proposal without justification.

In October 2022, after Byju’s’ debt was already sold to the distressed debt investors, the company spoke to its lenders and informed them that it was unable to get RBI’s approval for Whitehat to be a guarantor. Instead, it offered to move Whitehat’s assets into other companies and then use those companies to guarantee the loan. Which would really have been the same thing. But the lenders refused! Why?!
Continuing from the lawsuit:

Lenders subsequently asserted that an event of default under Section 8.1(e) of the Credit Agreement (an “Event of Default”) had occurred due to the failure to procure the Whitehat Guarantee.

Oh, that’s why. Byju’s’ lenders—distressed debt investors that wanted Byju’s dead ASAP—used the fact that Whitehat couldn’t be a guarantor of this loan to claim a default and use it as a reason to take Byju’s to court in the US. Honestly, I’m impressed. The Whitehat guarantee was redundant to begin with, but the lenders had found an out and their official reason #1 to take Byju’s to court.
Oh, there’s another thing. In June 2022, The Ken reported that Byju’s’ financials for 2021 had been held up by its auditors because of certain, umm, creative accounting. By this time, Byju’s should have ideally filed even its 2022 financials. It was very late! From the lawsuit:

The FY’21 Audit was delivered to the Lenders on August 30, 2022. It did not contain a “going concern” qualification or any similar qualifications about the Parent Guarantor’s ability to continue into the future. However, the FY’22 Audit could not begin until the FY’21 Audit had been completed, and the Parent Guarantor’s business has continued to grow rapidly

Byju’s’ 2021 financials were held up because auditors weren’t giving the company their go ahead, so of course its 2022 financials were held up as well.

On or around August 29, 2022, Shearman & Sterling, LLP (“S&S”), counsel for GLAS, sent a letter to Byju’s Alpha and Think & Learn requesting certain financial disclosures from Plaintiffs and Borrower, and asserting that the failure to deliver this financial information was a breach of the Credit Agreement. ... Rather than actually suffering any damage from the delayed FY’22 audit, Lenders opportunistically used this unintentional and non-material delay to exert pressure on Plaintiffs and the Borrower to extract onerous economic concessions.

I love it! Byju’s’ financials were delayed. Its agreement with the original lenders said that the company must share its audited financials with them. Byju’s wasn’t able to do that. The lenders found their official reason #2 to take Byju’s to court.
Byju’s sets up an offence
Before the lenders sued Byju’s last month, Byju’s tried its best to negotiate a deal. It gave the lenders an assurance of the company’s financial health, gave them concessions worth “tens of millions of dollars” and requested (pleaded) to take back their claims of Byju’s defaulting.
The lenders refused. They asked for either the full principal back or two-thirds of it, with an increment of 7% (!!) in the interest rate. Byju’s, of course, said no.
At this point, Byju’s knew that the lenders weren’t going to negotiate realistically. So it prepared its own offence. From the lawsuit:

The Credit Agreement prohibits transfers or assignments of the Lenders’ interests in the Term Loans to “Disqualified Lenders.” The Credit Agreement includes in its definition of Disqualified Lender “[a]ny [] Person (including an Affiliate or Approved Fund of a Lender) whose primary activity is the trading or acquisition of distressed debt,” and “those banks, financial institutions and other Persons separately identified by name . . . on or before the syndication . . . (which may be updated . . . from time to time . . .)”

In its agreement with the original lenders, Byju’s had put in a clause restricting its loan from being transferred to distressed debt investors. This is a risky clause to agree with, because it’s only these folks that buy loans that turn sour, but the original lenders had gone with it.

On information and belief, the entire course of Lenders’, and Defendant’s, bad-faith conduct has been driven by these distressed-debt lenders, who were never meant to have been lenders in the first place, and who acted with the intent of causing harm to Borrower and Plaintiffs. Meanwhile, Borrowers and Plaintiffs were initially unaware that the lenders were in fact being controlled by distressed debt dealers, and were therefore unable to take action to prevent their bad-faith plan from being implemented.

In its lawsuit this week, the crux of Byju’s’ argument is based on the fact that its loan is owned by distressed debt investors who were not eligible to be owning its debt in the first place. Also interesting is that Byju’s doesn’t seem to know who these lenders are. In its post-lawsuit statement, Byju’s named Redwood as one of the lenders, but it’s not named anywhere in the lawsuit.
Now what?
If push comes to shove, does Byju’s have the cash to pay off its lenders?
Last month, Byju’s transferred $500 million out of its US entity. The lenders had filed their lawsuit and there was a chance the court would freeze Byju’s’ US entity’s assets, so this was a precautionary move. So Byju’s has this $500 million. But that seems about it. Byju’s has been in the news saying that it’s trying to raise $700 million to pay off its debt. Yeah, between the horrible edtech market and the colourful lawsuits Byju’s is in, good luck with getting investors to donate their money to Byju’s.
But of course, Byju’s is now suing its lenders too. It does have an agreement that says that its debt can’t be held by distressed debt investors. So it’s not a frivolous suit.
Can Byju’s win? Sure. It would still have to pay its debt eventually. And it’s not straightforward. There are probably tens or even hundreds of lenders. It’s apparent that the distressed debt investors are the guiding force behind the lenders’ lawsuit, but it’s definitely not necessary that they form the majority of the lenders. In which case, Byju’s’ whole lawsuit falls apart.
The lenders are saying Byju’s defaulted by not keeping its part of the agreement, even though it had technically paid its dues. [4] Byju’s is saying that the lenders shouldn’t be the lenders in the first place and must be disqualified. We’ll see who’s right.
Footnotes
[1] It was a 5-year loan with a floating interest rate of 6% over Libor. Think of it as 6% over this magical interest-rate called Libor that some fancy-pants banks set amongst themselves everyday. Back in November 2021, Libor was at 0.25% and this was a 6.86% interest loan for Byju’s (the floor for Libor was 0.75%). Today, Libor is at about 5.64% and it’s an 11.6% loan.
[2] Multiple reasons for the investors to sell. One, interest rates went up and cash became more dear. If they had money stuck with Byju’s, it was money not being lent out to someone else. Second, edtech all around the world was in trouble. Kids were back in school and people didn’t think much of them anymore. Third, Byju’s as a company was showing its red flags.
[3] What a cool name!
[4] Until now, that is. Byju’s filed its lawsuit this week the same day it was supposed to make a $40 million interest payment.
Original Source: https://boringmoney.in/p/byjus-is-sued-by-its-lenders

Original Source: https://boringmoney.in/p/byjus-is-sued-by-its-lenders (my newsletter Boring Money -- please visit the link if you'd like to subscribe and receive similar posts in your inbox)
Spotify for voiceover
--
Four years ago I read an article in The Ken titled The making of a loan crisis at Byju’s. The gist of the story was that Byju’s was an edtech doing phenomenally well selling its digital courses to parents of young students. But these courses were expensive and these parents were poor. So it was also selling them loans to buy these courses. Only, without telling them. Parents would expect a course (which could be cancelled) but would end up with a loan (which couldn’t be cancelled).
Three days ago, Byju’s went to court in New York. Here’s the headline from TechCrunch: Byju’s sues ‘predatory’ lenders on $1.2B term loan, won’t make further payments.
Byju’s is a company that, arguably, made a business out of giving out predatory loans. Now it’s sued its own lenders and accused them of being predatory. I’m not saying that this is poetic justice but.. okay, scratch that. This is poetic justice! If Shakespeare were a finance writer this is the kind of stuff he would come up with.
Everyone wants to lend to Byju’s
In 2021, interest rates were low, loans were cheap. Tech startups were doing great, edtech startups were crushing it. Byju’s, not one to be left behind, had raised a lot of money but money was cheap so it also wanted to borrow. It wanted a $500 million loan from lenders in the US, which it wanted to use to acquire companies there. Instead, it ended up borrowing more than double—$1.2 billion—because lenders practically wanted to throw money at this overachieving edtech startup from India. [1]
The way a term loan such as this works is:

1. A company goes to an investment bank and asks for a loan
2. The bank syndicates this loan to investors, who become the lenders. Everyone comes together in a room and negotiates the specifics of the loan (which can be quite complex, as we’ll see)
3. The loan goes through and everyone’s happy. Presumably, the company likes its lenders, the lenders like the company
4. The original investors might sell the loans they own to other investors. The company’s only talking to an administrative agent representing the lenders, so over time it might not even know who its lenders are

In November 2021, prominent investment managers such as Blackstone, Fidelity and GIC had gone overboard to lend money to Byju’s. By September 2022, Byju’s lenders were desperately selling [2] their loans at a 36% discount on the principal. (Today, Byju’s debt is at a 20% discount, which is also bad.)
It’s likely that Blackstone, Fidelity and other of the OG lenders aren’t Byju’s’ lenders any more. They’ve almost certainly sold off their loans at a loss. Better get paid something than get paid nothing.
Dealers of the dead
If a company’s debt is being sold at a 36% discount, it’s because investors think that the company is unlikely to repay its loans. If you buy such a loan, you potentially stand to gain a lot—because of the discount—but well, you might also just lose everything.
If you’re a regular investment management company, like Blackstone, you don’t want to invest in such a loan. Your investors gave you this money to get predictable returns. If they wanted risk, they’d ask you to buy stocks. You don’t want to get into a fight with your borrower. If you feel they will not pay you back, you take a loss, sell the loans, move on.
If you’re a distressed debt investor, your entire business is to buy such distressed loans from regular investment managers like Blackstone. You’re going to get nasty borrowers who are unlikely to want to repay their loans but that’s okay. Because you’re nasty too. You spend less time on financial models, more in courts and around lawyers. You like to fight to get your money back. Sometimes you might lose, but the times you win, you win big. The wins cover your losses and some more.
Blackstone and the others sold Byju’s’ loans in desperation, and they were almost certainly bought by distressed debt investors. We don’t know who they are exactly, but Byju’s has indicated that one of them is Redwood Capital, a New York-based distressed debt investor.
If you’re a distressed debt investor, this is how it works:

1. You get a loan for super cheap
2. If the company repays its loan, great! You make a lot of money
3. But the company isn’t likely to repay, which is why you got the loan for cheap in the first place
4. So it’s in your best interest to not let the company die a slow death. Instead, you want to kill the company quick. You take the company to court ASAP and take all the money you’re owed while it’s still there

If the new investors waited, say, for a year, and took Byju’s to court after it had actually defaulted on its repayments—there might not be any money left! Byju’s may have given all the money to Lionel Messi or maybe laundered it away someplace the lenders wouldn’t find it. If you’re a distressed debt investor, you want to get Byju’s to court and get the court to force it to do whatever it takes to pay you back.
Last month, Byju’s’ new lenders sued Byju’s in the Delaware Court of Chancery [3]. We’ll get to the official reasons for this lawsuit in a bit, but what’s important is that Byju’s was not being sued because it defaulted on a payment. It hadn’t. It was being sued because the distressed debt investors expect it to default sooner or later, and they would prefer dealing with it sooner rather than later.
Lenders go for the kill
Usually, the finer details of corporate loans such as Byju’s’ aren’t public. But thanks to the multiple lawsuits we know quite a bit here.
The loan was made to Byju’s’ US entity and it was secured with guarantees from multiple Byju’s companies. From Byju’s’ lawsuit this week against its creditors (which I will get to), here are the guarantors:

1. Byju’s entities in India and Singapore
2. Byju’s’ US and Singapore acquisitions; companies including Oros, Epic, Great Learning, and Neuron
3. Whitehat India, Byju’s’ famous Indian acquisition

That’s a lot of companies guaranteeing a loan! Byju’s’ Indian entity is the parent of all the other guarantor companies, so having it as a guarantor should’ve been enough. I guess the rationale here was that it would be nice to have some non-Indian companies in the mix too, we do know how efficiently Indian courts work.
Apart from Byju’s the parent company itself, Whitehat was the only other Indian company guaranteeing this loan. The problem was that Whitehat itself, on paper, had negative net worth. It had probably taken loans of its own and did not have enough assets to cover them. In practice, this would be irrelevant, because Whitehat was owned by Byju’s and it would cover any of Whitehat’s liabilities. But, apparently, RBI regulations require Indian companies with negative net worth to take its approval before guaranteeing a loan. So even though Whitehat was a guarantor, the guarantee was meaningless until RBI granted its approval.
Yeah, well, RBI didn’t grant its approval. From the lawsuit:

Plaintiffs, Borrower, and Lenders had a call on or around October 6, 2022, to discuss the Whitehat Guarantee. In a good faith effort to negate any impact of the new regulations, Plaintiffs and the Borrower offered to move all assets out of Whitehat India into other subsidiaries of the Parent Guarantor that are Guarantors to the Credit Agreement, or are owned by Guarantors of the Credit Agreement. Lenders rejected this proposal without justification.

In October 2022, after Byju’s’ debt was already sold to the distressed debt investors, the company spoke to its lenders and informed them that it was unable to get RBI’s approval for Whitehat to be a guarantor. Instead, it offered to move Whitehat’s assets into other companies and then use those companies to guarantee the loan. Which would really have been the same thing. But the lenders refused! Why?!
Continuing from the lawsuit:

Lenders subsequently asserted that an event of default under Section 8.1(e) of the Credit Agreement (an “Event of Default”) had occurred due to the failure to procure the Whitehat Guarantee.

Oh, that’s why. Byju’s’ lenders—distressed debt investors that wanted Byju’s dead ASAP—used the fact that Whitehat couldn’t be a guarantor of this loan to claim a default and use it as a reason to take Byju’s to court in the US. Honestly, I’m impressed. The Whitehat guarantee was redundant to begin with, but the lenders had found an out and their official reason #1 to take Byju’s to court.
Oh, there’s another thing. In June 2022, The Ken reported that Byju’s’ financials for 2021 had been held up by its auditors because of certain, umm, creative accounting. By this time, Byju’s should have ideally filed even its 2022 financials. It was very late! From the lawsuit:

The FY’21 Audit was delivered to the Lenders on August 30, 2022. It did not contain a “going concern” qualification or any similar qualifications about the Parent Guarantor’s ability to continue into the future. However, the FY’22 Audit could not begin until the FY’21 Audit had been completed, and the Parent Guarantor’s business has continued to grow rapidly

Byju’s’ 2021 financials were held up because auditors weren’t giving the company their go ahead, so of course its 2022 financials were held up as well.

On or around August 29, 2022, Shearman & Sterling, LLP (“S&S”), counsel for GLAS, sent a letter to Byju’s Alpha and Think & Learn requesting certain financial disclosures from Plaintiffs and Borrower, and asserting that the failure to deliver this financial information was a breach of the Credit Agreement. ... Rather than actually suffering any damage from the delayed FY’22 audit, Lenders opportunistically used this unintentional and non-material delay to exert pressure on Plaintiffs and the Borrower to extract onerous economic concessions.

I love it! Byju’s’ financials were delayed. Its agreement with the original lenders said that the company must share its audited financials with them. Byju’s wasn’t able to do that. The lenders found their official reason #2 to take Byju’s to court.
Byju’s sets up an offence
Before the lenders sued Byju’s last month, Byju’s tried its best to negotiate a deal. It gave the lenders an assurance of the company’s financial health, gave them concessions worth “tens of millions of dollars” and requested (pleaded) to take back their claims of Byju’s defaulting.
The lenders refused. They asked for either the full principal back or two-thirds of it, with an increment of 7% (!!) in the interest rate. Byju’s, of course, said no.
At this point, Byju’s knew that the lenders weren’t going to negotiate realistically. So it prepared its own offence. From the lawsuit:

The Credit Agreement prohibits transfers or assignments of the Lenders’ interests in the Term Loans to “Disqualified Lenders.” The Credit Agreement includes in its definition of Disqualified Lender “[a]ny [] Person (including an Affiliate or Approved Fund of a Lender) whose primary activity is the trading or acquisition of distressed debt,” and “those banks, financial institutions and other Persons separately identified by name . . . on or before the syndication . . . (which may be updated . . . from time to time . . .)”

In its agreement with the original lenders, Byju’s had put in a clause restricting its loan from being transferred to distressed debt investors. This is a risky clause to agree with, because it’s only these folks that buy loans that turn sour, but the original lenders had gone with it.

On information and belief, the entire course of Lenders’, and Defendant’s, bad-faith conduct has been driven by these distressed-debt lenders, who were never meant to have been lenders in the first place, and who acted with the intent of causing harm to Borrower and Plaintiffs. Meanwhile, Borrowers and Plaintiffs were initially unaware that the lenders were in fact being controlled by distressed debt dealers, and were therefore unable to take action to prevent their bad-faith plan from being implemented.

In its lawsuit this week, the crux of Byju’s’ argument is based on the fact that its loan is owned by distressed debt investors who were not eligible to be owning its debt in the first place. Also interesting is that Byju’s doesn’t seem to know who these lenders are. In its post-lawsuit statement, Byju’s named Redwood as one of the lenders, but it’s not named anywhere in the lawsuit.
Now what?
If push comes to shove, does Byju’s have the cash to pay off its lenders?
Last month, Byju’s transferred $500 million out of its US entity. The lenders had filed their lawsuit and there was a chance the court would freeze Byju’s’ US entity’s assets, so this was a precautionary move. So Byju’s has this $500 million. But that seems about it. Byju’s has been in the news saying that it’s trying to raise $700 million to pay off its debt. Yeah, between the horrible edtech market and the colourful lawsuits Byju’s is in, good luck with getting investors to donate their money to Byju’s.
But of course, Byju’s is now suing its lenders too. It does have an agreement that says that its debt can’t be held by distressed debt investors. So it’s not a frivolous suit.
Can Byju’s win? Sure. It would still have to pay its debt eventually. And it’s not straightforward. There are probably tens or even hundreds of lenders. It’s apparent that the distressed debt investors are the guiding force behind the lenders’ lawsuit, but it’s definitely not necessary that they form the majority of the lenders. In which case, Byju’s’ whole lawsuit falls apart.
The lenders are saying Byju’s defaulted by not keeping its part of the agreement, even though it had technically paid its dues. [4] Byju’s is saying that the lenders shouldn’t be the lenders in the first place and must be disqualified. We’ll see who’s right.
Footnotes
[1] It was a 5-year loan with a floating interest rate of 6% over Libor. Think of it as 6% over this magical interest-rate called Libor that some fancy-pants banks set amongst themselves everyday. Back in November 2021, Libor was at 0.25% and this was a 6.86% interest loan for Byju’s (the floor for Libor was 0.75%). Today, Libor is at about 5.64% and it’s an 11.6% loan.
[2] Multiple reasons for the investors to sell. One, interest rates went up and cash became more dear. If they had money stuck with Byju’s, it was money not being lent out to someone else. Second, edtech all around the world was in trouble. Kids were back in school and people didn’t think much of them anymore. Third, Byju’s as a company was showing its red flags.
[3] What a cool name!
[4] Until now, that is. Byju’s filed its lawsuit this week the same day it was supposed to make a $40 million interest payment.
Original Source: https://boringmoney.in/p/byjus-is-sued-by-its-lenders

Original Source: https://boringmoney.in/p/byjus-is-sued-by-its-lenders (my newsletter Boring Money -- please visit the link if you'd like to subscribe and receive similar posts in your inbox)
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Four years ago I read an article in The Ken titled The making of a loan crisis at Byju’s. The gist of the story was that Byju’s was an edtech doing phenomenally well selling its digital courses to parents of young students. But these courses were expensive and these parents were poor. So it was also selling them loans to buy these courses. Only, without telling them. Parents would expect a course (which could be cancelled) but would end up with a loan (which couldn’t be cancelled).
Three days ago, Byju’s went to court in New York. Here’s the headline from TechCrunch: Byju’s sues ‘predatory’ lenders on $1.2B term loan, won’t make further payments.
Byju’s is a company that, arguably, made a business out of giving out predatory loans. Now it’s sued its own lenders and accused them of being predatory. I’m not saying that this is poetic justice but.. okay, scratch that. This is poetic justice! If Shakespeare were a finance writer this is the kind of stuff he would come up with.

Everyone wants to lend to Byju’s

In 2021, interest rates were low, loans were cheap. Tech startups were doing great, edtech startups were crushing it. Byju’s, not one to be left behind, had raised a lot of money but money was cheap so it also wanted to borrow. It wanted a $500 million loan from lenders in the US, which it wanted to use to acquire companies there. Instead, it ended up borrowing more than double—$1.2 billion—because lenders practically wanted to throw money at this overachieving edtech startup from India. [1]
The way a term loan such as this works is:

1. A company goes to an investment bank and asks for a loan
2. The bank syndicates this loan to investors, who become the lenders. Everyone comes together in a room and negotiates the specifics of the loan (which can be quite complex, as we’ll see)
3. The loan goes through and everyone’s happy. Presumably, the company likes its lenders, the lenders like the company
4. The original investors might sell the loans they own to other investors. The company’s only talking to an administrative agent representing the lenders, so over time it might not even know who its lenders are

In November 2021, prominent investment managers such as Blackstone, Fidelity and GIC had gone overboard to lend money to Byju’s. By September 2022, Byju’s lenders were desperately selling [2] their loans at a 36% discount on the principal. (Today, Byju’s debt is at a 20% discount, which is also bad.)
It’s likely that Blackstone, Fidelity and other of the OG lenders aren’t Byju’s’ lenders any more. They’ve almost certainly sold off their loans at a loss. Better get paid something than get paid nothing.

Dealers of the dead

If a company’s debt is being sold at a 36% discount, it’s because investors think that the company is unlikely to repay its loans. If you buy such a loan, you potentially stand to gain a lot—because of the discount—but well, you might also just lose everything.
If you’re a regular investment management company, like Blackstone, you don’t want to invest in such a loan. Your investors gave you this money to get predictable returns. If they wanted risk, they’d ask you to buy stocks. You don’t want to get into a fight with your borrower. If you feel they will not pay you back, you take a loss, sell the loans, move on.
If you’re a distressed debt investor, your entire business is to buy such distressed loans from regular investment managers like Blackstone. You’re going to get nasty borrowers who are unlikely to want to repay their loans but that’s okay. Because you’re nasty too. You spend less time on financial models, more in courts and around lawyers. You like to fight to get your money back. Sometimes you might lose, but the times you win, you win big. The wins cover your losses and some more.
Blackstone and the others sold Byju’s’ loans in desperation, and they were almost certainly bought by distressed debt investors. We don’t know who they are exactly, but Byju’s has indicated that one of them is Redwood Capital, a New York-based distressed debt investor.
If you’re a distressed debt investor, this is how it works:

1. You get a loan for super cheap
2. If the company repays its loan, great! You make a lot of money
3. But the company isn’t likely to repay, which is why you got the loan for cheap in the first place
4. So it’s in your best interest to not let the company die a slow death. Instead, you want to kill the company quick. You take the company to court ASAP and take all the money you’re owed while it’s still there

If the new investors waited, say, for a year, and took Byju’s to court after it had actually defaulted on its repayments—there might not be any money left! Byju’s may have given all the money to Lionel Messi or maybe laundered it away someplace the lenders wouldn’t find it. If you’re a distressed debt investor, you want to get Byju’s to court and get the court to force it to do whatever it takes to pay you back.
Last month, Byju’s’ new lenders sued Byju’s in the Delaware Court of Chancery [3]. We’ll get to the official reasons for this lawsuit in a bit, but what’s important is that Byju’s was not being sued because it defaulted on a payment. It hadn’t. It was being sued because the distressed debt investors expect it to default sooner or later, and they would prefer dealing with it sooner rather than later.

Lenders go for the kill

Usually, the finer details of corporate loans such as Byju’s’ aren’t public. But thanks to the multiple lawsuits we know quite a bit here.
The loan was made to Byju’s’ US entity and it was secured with guarantees from multiple Byju’s companies. From Byju’s’ lawsuit this week against its creditors (which I will get to), here are the guarantors:

1. Byju’s entities in India and Singapore
2. Byju’s’ US and Singapore acquisitions; companies including Oros, Epic, Great Learning, and Neuron
3. Whitehat India, Byju’s’ famous Indian acquisition

That’s a lot of companies guaranteeing a loan! Byju’s’ Indian entity is the parent of all the other guarantor companies, so having it as a guarantor should’ve been enough. I guess the rationale here was that it would be nice to have some non-Indian companies in the mix too, we do know how efficiently Indian courts work.
Apart from Byju’s the parent company itself, Whitehat was the only other Indian company guaranteeing this loan. The problem was that Whitehat itself, on paper, had negative net worth. It had probably taken loans of its own and did not have enough assets to cover them. In practice, this would be irrelevant, because Whitehat was owned by Byju’s and it would cover any of Whitehat’s liabilities. But, apparently, RBI regulations require Indian companies with negative net worth to take its approval before guaranteeing a loan. So even though Whitehat was a guarantor, the guarantee was meaningless until RBI granted its approval.
Yeah, well, RBI didn’t grant its approval. From the lawsuit:

Plaintiffs, Borrower, and Lenders had a call on or around October 6, 2022, to discuss the Whitehat Guarantee. In a good faith effort to negate any impact of the new regulations, Plaintiffs and the Borrower offered to move all assets out of Whitehat India into other subsidiaries of the Parent Guarantor that are Guarantors to the Credit Agreement, or are owned by Guarantors of the Credit Agreement.
Lenders rejected this proposal without justification.

In October 2022, after Byju’s’ debt was already sold to the distressed debt investors, the company spoke to its lenders and informed them that it was unable to get RBI’s approval for Whitehat to be a guarantor. Instead, it offered to move Whitehat’s assets into other companies and then use those companies to guarantee the loan. Which would really have been the same thing. But the lenders refused! Why?!
Continuing from the lawsuit:

Lenders subsequently asserted that an event of default under Section 8.1(e) of the Credit Agreement (an “Event of Default”) had occurred due to the failure to procure the Whitehat Guarantee.

Oh, that’s why. Byju’s’ lenders—distressed debt investors that wanted Byju’s dead ASAP—used the fact that Whitehat couldn’t be a guarantor of this loan to claim a default and use it as a reason to take Byju’s to court in the US. Honestly, I’m impressed. The Whitehat guarantee was redundant to begin with, but the lenders had found an out and their official reason #1 to take Byju’s to court.
Oh, there’s another thing. In June 2022, The Ken reported that Byju’s’ financials for 2021 had been held up by its auditors because of certain, umm, creative accounting. By this time, Byju’s should have ideally filed even its 2022 financials. It was very late! From the lawsuit:

The FY’21 Audit was delivered to the Lenders on August 30, 2022. It did not contain a “going concern” qualification or any similar qualifications about the Parent Guarantor’s ability to continue into the future.
However, the FY’22 Audit could not begin until the FY’21 Audit had been completed, and the Parent Guarantor’s business has continued to grow rapidly

Byju’s’ 2021 financials were held up because auditors weren’t giving the company their go ahead, so of course its 2022 financials were held up as well.

On or around August 29, 2022, Shearman & Sterling, LLP (“S&S”), counsel for GLAS, sent a letter to Byju’s Alpha and Think & Learn requesting certain financial disclosures from Plaintiffs and Borrower, and asserting that the failure to deliver this financial information was a breach of the Credit Agreement.
...
Rather than actually suffering any damage from the delayed FY’22 audit, Lenders opportunistically used this unintentional and non-material delay to exert pressure on Plaintiffs and the Borrower to extract onerous economic concessions.

I love it! Byju’s’ financials were delayed. Its agreement with the original lenders said that the company must share its audited financials with them. Byju’s wasn’t able to do that. The lenders found their official reason #2 to take Byju’s to court.

Byju’s sets up an offence

Before the lenders sued Byju’s last month, Byju’s tried its best to negotiate a deal. It gave the lenders an assurance of the company’s financial health, gave them concessions worth “tens of millions of dollars” and requested (pleaded) to take back their claims of Byju’s defaulting.
The lenders refused. They asked for either the full principal back or two-thirds of it, with an increment of 7% (!!) in the interest rate. Byju’s, of course, said no.
At this point, Byju’s knew that the lenders weren’t going to negotiate realistically. So it prepared its own offence. From the lawsuit:

The Credit Agreement prohibits transfers or assignments of the Lenders’ interests in the Term Loans to “Disqualified Lenders.”
The Credit Agreement includes in its definition of Disqualified Lender “[a]ny [] Person (including an Affiliate or Approved Fund of a Lender) whose primary activity is the trading or acquisition of distressed debt,” and “those banks, financial institutions and other Persons separately identified by name . . . on or before the syndication . . . (which may be updated . . . from time to time . . .)”

In its agreement with the original lenders, Byju’s had put in a clause restricting its loan from being transferred to distressed debt investors. This is a risky clause to agree with, because it’s only these folks that buy loans that turn sour, but the original lenders had gone with it.

On information and belief, the entire course of Lenders’, and Defendant’s, bad-faith conduct has been driven by these distressed-debt lenders, who were never meant to have been lenders in the first place, and who acted with the intent of causing harm to Borrower and Plaintiffs. Meanwhile, Borrowers and Plaintiffs were initially unaware that the lenders were in fact being controlled by distressed debt dealers, and were therefore unable to take action to prevent their bad-faith plan from being implemented.

In its lawsuit this week, the crux of Byju’s’ argument is based on the fact that its loan is owned by distressed debt investors who were not eligible to be owning its debt in the first place. Also interesting is that Byju’s doesn’t seem to know who these lenders are. In its post-lawsuit statement, Byju’s named Redwood as one of the lenders, but it’s not named anywhere in the lawsuit.

Now what?

If push comes to shove, does Byju’s have the cash to pay off its lenders?
Last month, Byju’s transferred $500 million out of its US entity. The lenders had filed their lawsuit and there was a chance the court would freeze Byju’s’ US entity’s assets, so this was a precautionary move. So Byju’s has this $500 million. But that seems about it. Byju’s has been in the news saying that it’s trying to raise $700 million to pay off its debt. Yeah, between the horrible edtech market and the colourful lawsuits Byju’s is in, good luck with getting investors to donate their money to Byju’s.
But of course, Byju’s is now suing its lenders too. It does have an agreement that says that its debt can’t be held by distressed debt investors. So it’s not a frivolous suit.
Can Byju’s win? Sure. It would still have to pay its debt eventually. And it’s not straightforward. There are probably tens or even hundreds of lenders. It’s apparent that the distressed debt investors are the guiding force behind the lenders’ lawsuit, but it’s definitely not necessary that they form the majority of the lenders. In which case, Byju’s’ whole lawsuit falls apart.
The lenders are saying Byju’s defaulted by not keeping its part of the agreement, even though it had technically paid its dues. [4] Byju’s is saying that the lenders shouldn’t be the lenders in the first place and must be disqualified. We’ll see who’s right.
​
Footnotes
[1] It was a 5-year loan with a floating interest rate of 6% over Libor. Think of it as 6% over this magical interest-rate called Libor that some fancy-pants banks set amongst themselves everyday. Back in November 2021, Libor was at 0.25% and this was a 6.86% interest loan for Byju’s (the floor for Libor was 0.75%). Today, Libor is at about 5.64% and it’s an 11.6% loan.
[2] Multiple reasons for the investors to sell. One, interest rates went up and cash became more dear. If they had money stuck with Byju’s, it was money not being lent out to someone else. Second, edtech all around the world was in trouble. Kids were back in school and people didn’t think much of them anymore. Third, Byju’s as a company was showing its red flags.
[3] What a cool name!
[4] Until now, that is. Byju’s filed its lawsuit this week the same day it was supposed to make a $40 million interest payment.
​
Original Source: https://boringmoney.in/p/byjus-is-sued-by-its-lenders