US court orders Byju Raveendran to pay $1 bln after default ruling

A US bankruptcy court has ordered the founder of Indian tech giant Byju Raveendran to pay more than $1.07 billion after entering a default judgment that holds Raveendran personally liable for the movement and concealment of funds from Byju's Alpha, the company's US financing arm.

A Delaware bankruptcy judge in his judgement noted that the extreme award was justified by months of wilfully thwarting attempts to trace funds missing from a bankrupt Byju's subsidiary.

The Bankruptcy Court found that Raveendran failed to comply with the discovery order and continued to be evasive on several occasions.

According to the judgement, the court will enter default judgment against Defendant Raveendran in the amount of $533 million, and on Counts II, V and VI, in the amount of $540.6 million.

The judgment directed Raveendran to provide a full and accurate accounting of the Alpha Funds and any proceeds thereof, such as the Camshaft LP Interest, including each subsequent transfer and any proceeds thereof.

As per Moneycontrol report, Byju’s Alpha was incorporated in Delaware in 2021 as a special-purpose vehicle created to raise and manage the company’s $1.2 billion term loan from a consortium of global lenders. The subsidiary had no operating business and functioned primarily as a holding entity for the loan proceeds.

Court filings show that it became the central entity through which the disputed $533 million transfer was executed.

The recent court judgement centres on the transfer of $533 million from Byju's Alpha to Camshaft Capital, a small Miami-based hedge fund. The transfer was followed by further movements of the investment interest through affiliated entities tied to Byju's, and the court held Raveendran personally responsible for directing these steps.

BYJU's Alpha was incorporated when Raveendran was running the management of edtech firm Think and Learn Private Limited (TLPL), which operated under Byju's brand name. TLPL had secured $1 billion Term Loan B from US-based lenders. The lenders had later alleged that BYJU's Alpha has violated terms of the loan and $533 million out of the total debt has been moved out of the US illegitimately.

The Glas Trust moved Delaware court and received a favourable order to take control of BYJU's Alpha. Both BYJU's Alpha and Glas Trust moved the Delaware Bankruptcy Court for the discovery of $533 million and related transactions. According to news agency PTI, the court had also issued contempt order in the matter but noted that Raveendran continues to refuse to respond to the discovery requests or pay the sanctions he owes.

"The facts and circumstances of this case indicate that Raveendran's continuing failure to adequately respond to the pending discovery requests is a personal decision by Raveendran, himself. The monetary sanctions, however, remain unpaid and have been ineffective. Raveendran lives abroad and apparently has no intention of satisfying his financial penalties or complying with the discovery orders. Accordingly, the monetary sanctions have not provided an effective remedy, making a harsher sanction such as default judgment appropriate in this instance," the judgement said.Read about our editorial guidelines and ethics policy