For Byju’s, sinking under its financial woes, an agreement with lenders to rework the terms of a $1.2 billion loan has come as a much-needed lifeline.

Byju’s and the steering committee of lenders—who together own over 85% of the edtech company’s $1.2 billion term B loan, which is at the centre of its troubles—have agreed to “work collaboratively toward a signed and completed term loan amendment” before 3 August.

“Successful execution of the Amendment would immediately solve for the loan’s acceleration and end all open litigation while avoiding further enforcement actions,” the statement released by the lenders on Monday said.

This amendment, once passed, will resolve the company’s loan crisis and end ongoing litigation, the statement read.

With this, Byju’s has found a way out of an immediate meltdown. But questions on what it is giving in return for this and what it means for the company in the long run still loom large. Even if the two parties make peace now, the debt still remains and Byju’s fundamentals have not changed. So, other than buying time, how does this help the company? Only time can tell.

Background: The edtech major had taken a $1.2 billion term loan in November 2021, for which it defaulted on a repayment deadline in June. Both parties had sued each other in American courts. Lenders have accused the company of breaking covenants of the loan agreement, which the Indian company denies. (Read: Lawsuit filed by Byju’s lenders details a string of broken promises.)

Recently, a Delaware court had dismissed a request by the term loan lenders to investigate a $500 million transfer from its US subsidiary to other entities, allowing Byju’s some momentary relief. For an in-depth insight into its term loan trouble, read our analysis here.

The cash-strapped edtech firm is facing issues across fronts: its offices being searched by Enforcement Directorate officials, issues of corporate governance, valuation downgrades and massive layoffs. It has been trying to raise fresh funds for months.

According to reports on Monday, Byju’s also vacated its largest office in Bengaluru to cut costs as it still awaits funding. Employees working out of this facility have either been relocated or asked to work from home, Moneycontrol reported.

Confidence in the company took a major hit after Deloitte resigned as its auditor over significant delays by the company to provide financial information and representatives of three influential backers—Peak XV, Prosus NV and the Chan-Zuckerberg Initiative—quit the Byju’s board.

A little over a week ago, Byju’s announced it had formed an advisory council to its board with T.V. Mohandas Pai and Rajnish Kumar as members. The move, seen as an attempt to restore accountability and credibility, was aimed at “enhancing its financial governance mechanisms and leveraging expert advice.” (Also read: Byju’s tuitions business is falling apart.)

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