Founder of Byju Byju Ravindran has received a big blow from the US Bankruptcy Court. Due to repeated absences and ignoring orders to submit necessary documents, the court has ordered them to pay back $1.07 billion (roughly Rs. 9,591 crore).
Why did the court give this blow?
In an order issued on November 20, Delaware Bankruptcy Court Judge Brendan Shannon held Byju’s American financial unit Byju’s Alpha responsible for the misappropriation and concealment of funds.
In fact, Byju’s Alfa was launched in 2021 as a Special Purpose Vehicle (SPV). Its objective was to raise approximately $1.2 billion in term loans for Byju from a consortium of global lenders. It had no separate operating business, so it acted as a holding entity to receive the entire loan amount.
Another blow to the already troubled ‘Byjus’; Try to survive!
Court Order Account
The court also ordered Ravindran to provide a “full and accurate accounting” of any earnings from Alpha Funds and subsequent transactions. Judge Brendan Shannon wrote that the relief granted was “excessive” but justified, citing “significant and repeated delays and confusion”. The order cites numerous missed deadlines, incomplete filings, absences and non-payment of previous sanctions, including a $10,000 per day fine imposed in July for civil contempt. Earlier this year, Byju’s creditors sued Ravindran directly, accusing him of “masterminding the theft” of $533 million in loans, along with his co-founder’s wife and another alleged partner of Byju.
Byju’s The founder had earlier dismissed the allegations as “totally baseless and false”. Ravindran did not immediately respond to a request for comment on the new decision. Once valued at $22 billion, Byju attracted significant interest and investment from companies such as BlackRock and Process. The company used the funds raised to expand and spend globally. They sponsored the FIFA World Cup in Qatar as well as the Indian National Cricket Team.
What did the court say?
The case reached court when a huge sum of $553 million was transferred through this unit. The money was sent to Camshaft Capital, a Miami-based hedge fund, and from there to Byju and other entities. Byju Ravindran, the founder of Byju, was directly involved in the transaction by the court, leading to a harsh verdict against him.
The court has directed Byju Ravindran, founder of Byju, to submit the complete accounts of Alpha Funds. It includes all information to the $533 million sent to Camshaft Capital, the limited partnership interest arising from that investment, and other transfers. Although Baiju does not have to pay the fine imposed by the court immediately, it is a big blow to Ravindran and he will be forced to comply with the order unless it is quashed by the High Court.
Byju fired 1000 employees, two percent of the total workforce cut!
