A software company that is owned by Byju’s founder, Byju Raveendran, took money from its US branches. This in turn broke the US bankruptcy rules as per a lawsuit filed in a Delaware court.
The trustee for the affiliates reportedly pointed out in court papers that funds owed to creditors were instead siphoned off.
A software company that is owned by Byju’s founder, Byju Raveendran, took money from its US branches. This in turn broke the US bankruptcy rules as per a lawsuit filed in a Delaware court.
This is as per a Bloomberg report. The bankruptcy attorney of the case, Claudia Springer, filed a lawsuit against Byju’s. The intent of the lawsuit is to recover around $700,000 that was transferred from companies that are overseen by her. According to the lawsuit, funds from US accounts were transferred to a Wells Fargo account associated with Whitehat. The duration of the money transfer was reportedly between September 27 and October 7, 2024.
The trustee for the affiliates also reportedly highlighted in the court papers that the money that should have been repaid back to the creditors was instead siphoned. The money was drawn off to Whitehat Education Technology.
This is a part of the ongoing dispute between US lenders and edtech firm Byju’s. The US lenders have alleged financial irregularities on behalf of Byju’s. The lenders have also highlighted that, in violation of bankruptcy rules, Byju’s casually moved $533 million and hid it from them. The bankruptcy law of the USA highlights that a company cannot withdraw money for payment of bills generally without approval of the bankruptcy court.
The lenders have also indicated that Byju’s is obligated to pay the entire $1.2 billion term loan B (TLB) along with interest. This is in contrast to the claim by Raveendran that the firm was supposed to pay just around Rs 20 crore. The lenders said in a statement, “Neither Byju nor the IRP have the authority to disqualify any term loan lender, 'and even if they did, BYJU's would still be obligated to repay the full amount of the loan plus interest. Any argument otherwise is illegitimate, and Byju knows it.”
Byju’s has been sued by edtech firm US lenders represented by Glas Trust for the recovery of $1.2 billion TLB in the US as well as in India. The financial trouble of once the most-valued Indian edtech firm BYJU'S started after US-based lenders started legal action against the company to recover $1.2 billion TLB.
The lenders have alleged that BYJU's group firm, BYJU's Alpha, secured $1.2 billion in Term Loan B, which is a loan given by institutional investors, and moved $500,000 out of the US in breach of loan agreement norms. BYJU'S has countered the allegation leveled by the lenders.
The lenders panel said almost all key personnel have abandoned BYJU's, including the chief executive officer, chief financial officer, and general counsel, and it has now seen a second auditor resign in less than two years due to BYJU's inability to explain away the whereabouts of the $500 million, among other reasons.
(With inputs from PTI)