A US bankruptcy court has ordered Byju’s founder Byju Raveendran to pay more than $1 billion, ruling that he obstructed the discovery of funds that the edtech firm’s lenders alleged he had diverted from an American subsidiary.

The court issued the default ruling after holding that Raveendran consistently ignored its orders and failed to participate in the proceedings, after a group of lenders who had given a $1.2 billion term loan to the subsidiary, Byju’s Alpha, filed a motion for default against him on August 11.

It ordered him to pay the lenders $533 million that they claimed he had transferred from the loan amount to hedge fund Camshaft Capital in 2022, and another $540.6 million for shifting interest from the hedge fund in 2023. He has also been directed to give a “full and accurate accounting” of how the Alpha funds were used.

Raveendran denies all the allegations and will file an appeal against the order that was pronounced without giving him an opportunity to present his defence, his lawyer said.

“The court acknowledges that the relief granted herein is extraordinary,” bankruptcy judge Brendan Linehan Shannon said in the order. “But the circumstances of this case are, frankly, unique and unlike anything the undersigned has encountered before, thereby making such relief in this case richly warranted.”

The US lenders, represented by Glas Trust, filed the suit through Byju’s Alpha in the US Bankruptcy Court for the District of Delaware on April 10, accusing Raveendran, his wife Divya Gokulnath and former Byju’s executive Anita Kishore of hiding and misappropriating $533 million from a term loan.

In July, the court held Raveendran in civil contempt for failing to comply with its orders to share documents related to the case. It ordered him to comply with the limited expedited discovery orders, which require the information to be shared expeditiously and as per the conditions set by the court, and pay a penalty of $10,000 for each day he remained in contempt of the orders.

“As of the date of this order, no funds have been paid, despite the accumulation of hundreds of thousands of dollars in sanctions,” the order said.

Raveendran’s lawyer said the court relied on an earlier contempt order while pronouncing the latest ruling and prevented Raveendran from defending himself.

“Claims are being prepared against Glas Trust and others in other jurisdictions. Such claims to be issued by all or some of Byju’s founders are expected to demand monetary damages of not less than $2.5 billion and, absent a settlement, are expected to be filed with the relevant court prior to the end of 2025,” said J Michael McNutt, senior litigation advisor at Lazareff Le Bars Eurl who represents Raveendran.

This development comes at a time when Byju’s Alpha has been accused of round-tripping $533 million from the $1.2 billion loan through a London-based company, OCI Ltd, as per a filing made with the bankruptcy court.

The alleged diversion of funds came into light after OCI founder Oliver Chapman, in a sworn declaration, said Raveendran intended to divert most of the $533 million to a Singapore entity owned by him for personal use. Raveendran has denied the allegations.