Byju‘s founder, Raveendran, is set to appeal a recent ruling from a U.S. bankruptcy judge that mandated him to pay over $1 billion, stemming from a complex bankruptcy case involving the educational technology giant. The legal fight largely focuses on claims of financial malfeasance and defying court orders amid Byju’s continuing insolvency case.
The Delaware bankruptcy court ultimately ruled Raveendran in default after he consistently ignored court directives. This has meant missing hearings and even missing key deadlines. The judge found a “months long pattern of noncompliance.” He subsequently entered a default judgment related to $533 million that Byju’s U.S. subsidiary, Alpha, reportedly moved out of the country in 2022. This is an amount that still has to be made up.
“We consider that the U.S. Court erred in its judgment of this matter and will be filing the necessary appeals and other contestations related to this judgment and related orders,” – J. Michael McNutt
That storm was kicked off when Byju’s defaulted on a $1.2 billion term loan. This loan, which was granted to the company in 2021, is held by a number of lenders. Allegations then began to emerge that Raveendran misdirected these funds for personal use, allegations that Raveendran has strongly rejected.
In a drastic escalation of enforcement, in April GLAS Trust and the other lenders filed suit against Raveendran and his spouse, Divya Gokulnath. They want them to pay back the $533 million that is unaccounted for. In explaining their response to the judge’s decision, Raveendran’s lawyer argued that the court failed to take crucial facts into account throughout the trial.
U.S. Bankruptcy Judge Brendan Shannon remarked on the unique circumstances of the case, stating:
“The circumstances of this case are, frankly, unique and unlike anything the undersigned has encountered before, thereby making such relief… richly warranted.”
Byju’s is now embroiled in a series of lawsuits. It’s no surprise then that at the same time the company is in a court-supervised sale process after declaring bankruptcy last year. Among the early bidders for the company are other big name education companies. The biggest names in the current batch are Manipal Education and Medical Group (MEMG) and Ronnie Screwvala’s UpGrad.
Raveendran’s legal troubles were just the latest blow to Byju’s. Until a high-profile collapse last year, this private company was India’s most-lauded unicorn, with a $22 billion valuation at one point. The firm had raised a total of $600 million in investment from international investors such as Tiger Global, the Chan Zuckerberg Initiative and Prosus.
Those opposing the ruling have 7 days to appeal, according to the bankruptcy judge’s order. Raveendran has faced daily sanctions of $10,000 for his continuing violation, many of which are still accruing and still unpaid.
