Byju Raveendran, once the poster boy of startup ventures and owner of learning platform Byju’s, has been asked by a US bankruptcy court to pay more than US$1.07 billion, after holding him personally liable for the movement and concealment of funds from Byju’s Alpha, the company’s US financing arm.
Judge Brendan Shannon of the Delaware Bankruptcy Court issued the order on Friday, after Raveendran repeatedly failed to comply with directions to appear and provide documents.
The court’s order followed a September 29 hearing on the default request, where the judge cited several cases of noncompliance. He noted that Raveendran skipped hearings, missed extended deadlines, and ignored a prior contempt order imposing US$10,000 daily sanctions that remain unpaid.
Raveendran said he will contest the default judgement. A default judgment is issued when a party does not participate in litigation or ignores court orders, allowing the court to decide without a trial.
J Michael McNutt, senior litigation advisor at Lazareff Le Bars, representing Raveendran, said in a prepared statement: “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.
“The court, in our view, ignored relevant facts.”
In a public press release issued from Paris, Raveendran denied all allegations and said the default judgment was issued on an expedited basis and did not permit him to present a defence. The statement also said he was given insufficient time to retain legal counsel and respond to orders accelerating the proceedings. He said the ruling was a consequence of an earlier contempt order, which Raveendran said he will contest as part of the appeal.
Once India’s most valued startup with a valuation of US$22 billion and VCs like Tiger Global backing it, Byju’s was also the sponsor of the Indian national cricket team – one of the most prominent, expensive, and sought-after brandings in the country. It defaulted in its payments to the powerful Board for Control of Cricket in India (BCCI), which initiated one of the several cases that have been filed against the company.
The case in the US
However, the US case is based on the actions of Byju’s Alpha, which was incorporated in Delaware in 2021 as a special-purpose vehicle created to raise and manage the company’s US$1.2 billion term loan from a consortium of global lenders.
Court filings show that Byju’s Alpha transferred US$533 million to Camshaft Capital, a small Miami-based hedge fund. This was followed by further movements of the investment interest, which was “round-tripped” to affiliated entities tied to Byju’s, and the court held Raveendran personally responsible for directing these steps.
The court awarded US$533 million on the claim that Raveendran aided and abetted a breach of fiduciary duty, and an additional US$540.6 million on claims of breach of fiduciary duty, conversion and civil conspiracy.
In his ruling, Judge Shannon said the relief granted was “extraordinary”, and added: “The circumstances of this case are, frankly, unique and unlike anything the undersigned has encountered before, thereby making such relief is richly warranted.”
Follow us on
