Byju Raveendran Faces $1.07 Billion Order in U.S. Bankruptcy Court
Byju Raveendran, the founder of Byju’s, a prominent Indian ed-tech company, is currently embroiled in a legal battle after a U.S. bankruptcy court issued a judgment directing him to pay over $1.07 billion. Raveendran has vehemently denied any wrongdoing and has accused lenders of providing misleading information to the court. He has expressed his intention to appeal the ruling, which signifies a significant setback for the once-celebrated entrepreneur in India’s startup landscape.
The ruling by a Delaware bankruptcy judge came after it was discovered that Raveendran had continuously disregarded court orders and had provided evasive and incomplete responses regarding the alleged transfer of approximately $533 million by Byju’s U.S. unit in 2022, which was never recovered. The court also highlighted concerns related to a separate limited-partnership stake valued at around $540.6 million. These legal proceedings stem from a case brought forth by lenders seeking to retrieve funds linked to a $1.2 billion term loan extended to Byju’s in 2021.
Earlier this year, a group of U.S. lenders, led by GLAS Trust, took legal action against Raveendran and his wife, Divya Gokulnath, over the missing $533 million in loan proceeds. The couple denied any misconduct and accused the lenders of attempting a hostile takeover of the company. They also announced plans to file a $2.5 billion lawsuit against GLAS Trust and others in various jurisdictions. However, no such lawsuit has been publicly filed to date. Additionally, Byju’s lodged a complaint in the New York Supreme Court contesting the acceleration of the term loan in 2023.
The recent court order followed a hearing in September, where the judge noted Raveendran’s consistent noncompliance with court directives. The judge pointed out that Raveendran had skipped hearings, missed deadlines, and disregarded a previous contempt order that imposed daily sanctions of $10,000, which remain unpaid.
Responding to the judgment, J. Michael McNutt, a senior litigation advisor at Lazareff Le Bars representing Raveendran, stated that they believe the court erred in its decision and intend to file appeals and contestations. The legal counsel argued that the court did not provide Raveendran with a fair opportunity to present his defense and instead relied on previous rulings. They also emphasized that the funds in question were utilized for the benefit of Byju’s parent company, Think & Learn, rather than for personal gain.
Despite the ongoing legal battle, Byju’s, once valued at $22 billion and supported by prominent investors like Tiger Global and the Chan Zuckerberg Initiative, now faces a tumultuous period marked by lawsuits, financial challenges, layoffs, and a struggle for control as creditors seek to recover their investments.
Earlier this week, allegations surfaced in the Delaware bankruptcy case suggesting that most of the missing $533 million from Byju’s U.S. unit had been redirected back to Raveendran and his associates. Raveendran refuted these claims, stating that the funds were not misused for personal purposes.
Meanwhile, in India, Byju’s is undergoing a court-supervised sale process following insolvency proceedings initiated last year. Potential buyers include Manipal Education and Medical Group (MEMG) and Ronnie Screwvala’s UpGrad.
