Byju’s founder to appeal U.S. court order to pay over $1B in bankruptcy case

Byju Raveendran, the founder of the Indian ed-tech firm Byju’s, is contesting a recent U.S. bankruptcy court ruling that mandates him to pay over $1.07 billion. Raveendran vehemently denies any wrongdoing, alleging that lenders misled the court and pledging to appeal this significant judgment, which symbolizes a drastic downturn for a once-celebrated figure in India's startup landscape. The default judgment, issued by a bankruptcy judge in Delaware, came after Raveendran was found to have disregarded court orders, providing what the judge deemed 'evasive and incomplete' answers about approximately $533 million that Byju’s U.S. arm allegedly transferred in 2022 without recovery. The judge also highlighted concerns regarding a separate limited-partnership stake valued at around $540.6 million. This ruling, dated November 20, follows legal actions initiated by lenders aiming to reclaim funds related to a $1.2 billion term loan extended to the startup in 2021. Earlier this year, a coalition of U.S. lenders, led by GLAS Trust, took legal action against Raveendran and his wife, Divya Gokulnath, who co-founded Byju’s, over the unaccounted $533 million in loan proceeds. The couple refuted the allegations, accusing the lenders of attempting to seize control of the company. They also expressed intentions to file a $2.5 billion lawsuit against GLAS Trust and other parties in India and beyond, although such filings have not yet been made public. The latest court order followed a hearing on September 29, where the judge pointed out a prolonged history of noncompliance from Raveendran, including missed hearings and ignored deadlines, alongside a prior contempt order that imposed daily sanctions of $10,000, which remain unpaid. U.S. Bankruptcy Judge Brendan Shannon described the situation as 'extraordinary,' stating that the case's circumstances are unique and merit such relief. In a statement to TechCrunch, J. Michael McNutt, a senior litigation advisor for Raveendran, asserted that the U.S. court made an error in its judgment and indicated plans to file appeals and contest the ruling. He criticized the court for issuing a judgment without allowing Raveendran a chance to defend himself, emphasizing that GLAS Trust was aware that the Alpha loan funds were not utilized for personal gain by Raveendran or the other founders, but rather for Think & Learn, Byju’s parent company. As the founders prepare to pursue claims against GLAS Trust and others in multiple jurisdictions, seeking at least $2.5 billion in damages, the default judgment represents a shocking decline for Raveendran and Byju's, which was once valued at $22 billion and supported by significant investors like Tiger Global and the Chan Zuckerberg Initiative. Byju's is currently entangled in lawsuits, facing funding challenges, layoffs, and a struggle for control as creditors work to recover their investments. Earlier this week, legal documents in the Delaware bankruptcy case alleged that most of the $533 million missing from Byju's U.S. unit was 'round-tripped back' to Raveendran and his associates, a claim he denies. Meanwhile, in India, Byju’s is undergoing a court-supervised sale process following the initiation of insolvency proceedings last year, with initial bidders including Manipal Education and Medical Group and UpGrad, led by Ronnie Screwvala.