BYJU'S executives face $25,000 daily fines for US court contempt
What's the story
Two executives of beleaguered Indian edtech firm BYJU'S have been held in contempt of a US court.
BYJU'S manager Vinay Ravindra and company associate Rajendran Vellapalath are facing daily fines of $25,000 each for failing to comply with a court order.
They were held in contempt for failing to provide information regarding their alleged role in diverting software, cash, and other assets from BYJU'S US operations that are currently under the supervision of the court.
Additional violation
Vellapalath's firm also found guilty of contempt
Along with the individual charges, Vellapalath's tech company Voizzit Information Technology, was also found guilty of contempt.
The firm had filed a lawsuit in India to gain control over assets owned by BYJU'S US subsidiaries, Epic! Creations and Tangible Play.
This action was deemed unlawful by US Bankruptcy Judge Brendan Linehan Shannon in Delaware.
Past incidents
BYJU'S founder's associates have a history of contempt charges
Notably, this isn't the first time BYJU'S founder BYJU Raveendran's associates have been found in contempt.
In the ongoing legal battle between the company and lenders over $1.2 billion, this is at least the third time a close associate has flouted court orders.
Earlier, Raveendran's brother Riju Ravindran and hedge fund founder William C Morton were also penalized for refusing to answer questions about $533 million in loan proceeds lenders have been trying to trace.
Response
Vellapalath and Voizzit plan to address contempt ruling
In light of the contempt ruling, Vellapalath and Voizzit are acting quickly.
Their attorney Maureen Abbey Scorese said that their clients have always intended to act in good faith and are now working quickly to address any concerns raised by the court.
Meanwhile, a BYJU'S representative did not respond to media queries.
Liquidation threat
BYJU'S US education software businesses face liquidation
US lenders are now looking to liquidate BYJU'S US education software businesses, which they bought for $820 million.
The once high-flying Indian start-up has since filed for bankruptcy in India after defaulting on debt obligations to US creditors.
Separately, an Indian business court ruled in favor of the lenders Wednesday by reinstating their agent Glas Trust Co., to a key creditors' committee in BYJU'S insolvency proceedings.