Byju’s Founder To Appeal U.s. Court Order To Pay Over $1b In Bankruptcy Case

Byju Raveendran, nan embattled laminitis of Indian ed-tech elephantine Byju’s, has blasted a U.S. bankruptcy court’s bid directing him to salary much than $1.07 billion. He is denying wrongdoing, accusing lenders of misleading nan court, and vowing to entreaty a ruling that marks a melodramatic autumn for a onetime poster boy of India’s startup boom.

The Delaware bankruptcy judge issued a default judgement aft uncovering that Raveendran had many times ignored tribunal orders and provided “evasive, incomplete” responses regarding astir $533 cardinal that Byju’s U.S. portion allegedly transferred successful 2022 and ne'er recovered. The judge besides cited issues pinch a abstracted limited-partnership liking later weighted astatine astir $540.6 million. The ruling, dated November 20, stems from ineligible action by lenders seeking to claw backmost costs linked to nan $1.2 cardinal word indebtedness they extended to nan ed-tech startup successful 2021.

Earlier this year, successful April, a group of U.S. lenders led by GLAS Trust sued Raveendran and his wife, Byju’s co-founder Divya Gokulnath, successful nan Delaware bankruptcy tribunal complete nan missing $533 cardinal successful indebtedness proceeds. The mates denied wrongdoing astatine nan clip and accused lenders of attempting a dispute takeover of nan company. They later said they planned to prosecute a $2.5 cardinal suit against GLAS Trust and others successful India and different jurisdictions, though nary specified filing has publically surfaced. This was successful summation to nan title Byju’s filed successful nan New York Supreme Court challenging nan acceleration of nan word indebtedness successful 2023.

The court’s latest bid followed a September 29 proceeding connected nan default request, wherever nan judge cited a months-long shape of noncompliance. The judge noted that Raveendran skipped hearings, missed extended deadlines, and ignored a anterior contempt bid imposing $10,000 successful regular sanctions that stay unpaid.

U.S. Bankruptcy Judge Brendan Shannon said nan alleviation granted successful nan lawsuit was “extraordinary,” adding that “the circumstances of this lawsuit are, frankly, unsocial and dissimilar thing nan undersigned has encountered before, thereby making specified relief… richly warranted.” The judge has fixed nan parties 7 days to respond to nan ruling.

“We see that nan U.S. Court erred successful its judgement of this matter and will beryllium filing nan basal appeals and different contestations related to this judgement and related orders,” said J. Michael McNutt, elder litigation advisor astatine Lazareff Le Bars, representing Raveendran, successful a prepared connection to TechCrunch. “The court, successful our view, ignored applicable facts.”

Raveendran’s ineligible counsel based on that nan tribunal issued nan judgement without giving him an opportunity to coming a defense and alternatively relied connected an earlier contempt order. The counsel besides based on that nan ruling grounded to admit that GLAS Trust was alert nan Alpha indebtedness costs were not utilized for nan individual use of Raveendran aliases different founders but alternatively for Think & Learn, nan startup’s genitor company, nan counsel said.

The counsel said Byju’s founders are preparing claims against GLAS Trust and others successful aggregate jurisdictions, expected to activity astatine slightest $2.5 cardinal successful damages and, absent a settlement, to beryllium revenge earlier nan extremity of 2025.

Nonetheless, nan default judgement marks a stunning autumn for Raveendran and his eponymous company, erstwhile India’s astir valuable startup pinch a $22 cardinal valuation and backed by world investors including Tiger Global, nan Chan Zuckerberg Initiative, and Prosus. The institution is now mired successful lawsuits, backing droughts, wide layoffs, and a conflict for power arsenic lenders and creditors title to retrieve what they can.

Raveendran antecedently challenged nan Delaware court’s jurisdiction, but nan judge rejected that statement successful an earlier ruling, penning that “Raveendran’s behaviour that gives emergence to nan litigation present relates to his activities … successful nan United States fundraising and serving arsenic a director, officer, aliases head of a United States corporation.”

Earlier this week, a filing successful nan Delaware bankruptcy lawsuit alleged that astir of nan $533 cardinal missing from Byju’s U.S. unit, Alpha, was “round-tripped back to Byju Raveendran and associates.” In a response, Raveendran denied nan allegation, saying nan costs were not utilized for individual gain.

Meanwhile successful India, Byju’s is undergoing a court-supervised waste process aft insolvency proceedings began past year, pinch early bidders including Manipal Education and Medical Group (MEMG) and Ronnie Screwvala’s UpGrad.