Byju Raveendran, founder of Indian edtech giant Byju’s, has slammed a US bankruptcy court’s order ordering him to pay more than $1.07 billion. He has denied any wrongdoing, accused lenders of misleading the court and vowed to appeal the ruling, which marks a dramatic fall from grace for the man who was once the poster boy of India’s startup boom.
A bankruptcy judge in Delaware issued a default judgment, finding that Raveendran repeatedly ignored court orders and gave “evasive and incomplete” answers regarding approximately $533 million that Biju’s U.S. unit reportedly transferred in 2022 and never recovered. The judge also addressed the issue of another limited partnership stock that was later valued at approximately $540.6 million. The judgment, dated November 20, stems from a legal action by the lender seeking to recover funds related to a $1.2 billion term loan it made to the edtech startup in 2021.
Earlier this year, in April, a group of US lenders led by GLAS Trust sued Raveendran and his wife, Byju co-founder Divya Gokulnath, in Delaware Bankruptcy Court, alleging the loss of $533 million in loans. The couple denied any wrongdoing at the time and accused the lender of attempting a hostile takeover. They have since announced plans to file $2.5 billion lawsuits against GLAS Trust and others in India and other jurisdictions, although such lawsuits have not been made public. This is in addition to a complaint Biju filed in New York Supreme Court seeking acceleration of the 2023 term loan.
The court’s latest order follows a Sept. 29 hearing on the default claims, where the judge cited a pattern of defaults spanning several months. The judge noted that Raveendran had failed to attend hearings, failed to meet extended deadlines, and ignored an earlier contempt order imposing a penalty of $10,000 a day on unpaid charges.
U.S. Bankruptcy Judge Brendan Shannon called the relief granted in the case “unusual,” adding, “Frankly, the circumstances of this case are unique and unlike anything the undersigned have ever experienced before, so such relief is…well justified.” The judge gave both parties seven days to respond to the ruling.
“We believe the U.S. court erred in this matter, and we plan to file any necessary appeals and other challenges related to this judgment and related orders,” J. Michael McNutt, senior litigation counsel at Lazarev Le Birds, who represented Mr. Raveendran, said in a prepared statement to TechCrunch. “In our view, the court ignored the relevant facts.”
Raveendran’s lawyer argued that the court did not give him a chance to defend himself and relied on an earlier contempt order to impose the sentence. Lawyers also argued that the judgment did not acknowledge that GLAS Trust knew that the Alpha loan funds were being used for the benefit of the startup’s parent company, Think & Learn, and not for the personal benefit of Raveendran or the other founders.
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Byju’s founders are preparing claims against GLAS Trust and others in multiple jurisdictions, seeking at least $2.5 billion in damages and expected to be filed by the end of 2025 if no settlement is reached, lawyers said.
Nevertheless, the latest default judgment marks a stunning fall for Raveendran and his namesake company, which was once India’s most valuable startup with a $22 billion valuation and backed by global investors such as Tiger Global, the Chan Zuckerberg Initiative and Prosus. The company is currently mired in litigation, a cash drought, mass layoffs and a battle for control as lenders and creditors compete to recover as much as possible.
Mr. Raveendran had previously challenged the jurisdiction of the Delaware state court, but the judge rejected that argument in an earlier ruling, writing that “Mr. Raveendran’s conduct giving rise to litigation here relates to his fundraising in the United States and his activities as a director, officer, or manager of a United States corporation.”
Earlier this week, a filing in a Delaware bankruptcy case claimed that most of the $533 million missing from Byju’s U.S. arm Alpha “has been returned to Byju Raveendran and his associates.” In response, Mr. Raveendran denied the allegations, insisting that the funds were not used for personal gain.
Meanwhile, in India, Byju’s is undergoing a court-supervised sale process after bankruptcy proceedings were initiated last year, with early bidders including Manipal Education and Medical Group (MEMG) and Ronnie Screwvala’s Upgrad.
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