BYJU'S founder to appeal US court order demanding $1B payment
What's the story
BYJU Raveendran, the founder of Indian ed-tech giant BYJU'S, has announced his intention to appeal a US bankruptcy court's order. The court had directed him to pay over $1 billion, an amount he has vehemently contested. Raveendran denied any wrongdoing and accused lenders of misleading the court. He said he would file an appeal against this ruling, which marks a major setback for India's once most valuable start-up with a valuation of $22 billion.
Judgment details
Ruling based on BYJU'S US unit's fund transfer
The Delaware bankruptcy judge issued a default judgment after finding that Raveendran had repeatedly ignored court orders and provided "evasive, incomplete" responses regarding some $533 million. The amount was allegedly transferred by BYJU'S US unit in 2022 and has not been recovered yet. The judge also cited issues with a separate limited-partnership stake later valued at roughly $540.6 million.
Legal battle
US lenders' lawsuit and BYJU'S response
In April, a group of US lenders led by GLAS Trust sued Raveendran and his wife, BYJU'S co-founder Divya Gokulnath. The lawsuit was over the missing $533 million in loan proceeds. The couple denied any wrongdoing at that time and accused lenders of trying to take over the company. They also said they would file a $2.5 billion lawsuit against GLAS Trust and others in India and other jurisdictions, though no such filing has been publicly reported yet.
Noncompliance issues
Court's order follows pattern of noncompliance by Raveendran
The court's latest order came after a September 29 hearing on the default request. The judge noted a months-long pattern of noncompliance from Raveendran, who skipped hearings, missed extended deadlines, and ignored an earlier contempt order imposing $10,000 in daily sanctions that remain unpaid. US Bankruptcy Judge Brendan Shannon said the relief granted in this case was "extraordinary," adding that "the circumstances of this case are frankly unique and unlike anything the undersigned has encountered before."
Appeal plans
Raveendran's legal team to appeal against court's judgment
Raveendran's legal team has said they will appeal against the court's judgment. J Michael McNutt, senior litigation advisor at Lazareff Le Bars, representing Raveendran, said in a statement that "We consider that the US Court erred in its judgment of this matter and will be filing the necessary appeals and other contestations related to this judgment and related orders." He added, "The court, in our view, ignored relevant facts."
Future actions
BYJU'S founders preparing claims against GLAS Trust
Raveendran's legal counsel argued the court issued the judgment without giving him an opportunity to present a defense. They also said it failed to acknowledge that GLAS Trust was aware the Alpha loan funds were not used for personal gain but rather for Think & Learn, BYJU'S parent company. The counsel added that BYJU'S founders are preparing claims against GLAS Trust and others in multiple jurisdictions, expected to seek at least $2.5 billion in damages by the end of 2025.