After a disagreement with lenders, education startup Byju’s decided not to make additional loan payments totalling $1.2 billion, escalating a dispute that may endanger the future of one of India’s most successful startups. People with knowledge of the situation claim that Byju’s failed to pay the $40 million in interest that was scheduled to be paid on Monday. The business announced in a statement on June 6 that it has complained to the New York Supreme Court about the loan.

The company said, referring to the $1.2 billion term loan B that it is evident that the entirety of the TLB is in dispute given that legal actions have been initiated in both Delaware and New York. As a result, until the legal issue is resolved, BYJU’S cannot be expected to—and has chosen—make any additional payments to the TLB lenders, including any interest.

After the online tutoring boom of the pandemic era peaked and Byju’s finances were strained, the company had been attempting to reach an agreement with creditors to restructure the loan. The protracted negotiations were abandoned, however, when creditors demanded an accelerated repayment.

As per the reports, according to the people that asked not to be identified as this is a private matter said that the payment had not been made as of 6 PM on June 5 in New York. According to information gathered by Bloomberg, the loan dropped to a low of 64.375 cents on the dollar on Monday, from 78 cents on June 2.

The offices of the business run by former teacher Byju Raveendran were searched by the Indian agency that looks into violations of the country’s foreign exchange laws because the business had previously missed filing deadlines for financial accounts.

The son of teachers, Raveendran, founded his own startup in 2015. Through a surge in demand for online education and a string of acquisitions, the company—whose parent company is officially known as Think & Learn Pvt—grew into the most valuable of the nation’s startups over the past ten years.

It attracted investments from Silver Lake Management, Naspers Ltd., Tiger Global Management, and Mark Zuckerberg’s Chan Zuckerberg Initiative. In order to go public last year, Byju’s had reached a valuation of $22 billion and had thought about joining forces with a SPAC.

Byju’s refuted the notion that its failure to pay interest indicated that it was experiencing financial difficulties.