US court finds BYJU'S, Riju Ravindran guilty of defrauding lenders
What's the story
A US bankruptcy court has ruled that Indian edtech giant BYJU'S, its parent firm Think & Learn Pvt Ltd, and Riju Ravindran—brother of founder Byju Raveendran—defrauded American lenders tied to BYJU'S Alpha, Inc.
The judgment was delivered by Judge John T. Dorsey of the US Bankruptcy Court for the District of Delaware.
He also held Camshaft Capital Fund and its affiliates responsible for devising and implementing an illegal scheme that defrauded these lenders.
Fraudulent activities
Court confirms fraudulent transfers and fiduciary duty violation
The court confirmed that several fund transfers from BYJU'S Alpha were fraudulent transfers and conversions, basically theft.
It was also confirmed that Riju had violated his fiduciary duties as a Director of BYJU'S Alpha.
The lenders' steering committee said in a press release, "We are gratified (that) the court unequivocally recognized that Riju Ravindran, Camshaft, and BYJU'S together conducted a deliberate fraud on a global scale arising from the theft of $533 million."
Allegations
Lenders allege concealment of 'Alpha Funds' by BYJU'S
The lenders alleged that soon after the credit agreement was finalized, BYJU'S US division under Ravindran and associates defaulted on certain loan covenants in March-April 2022.
They alleged that weeks after these defaults, Ravindran and others moved $533 million via a series of transfers.
The lenders further accused BYJU'S, Ravindran, and others of repeatedly hiding the location of the 'Alpha Funds' and not providing financial statements that would have disclosed where these funds were transferred.
Insolvency proceedings
Insolvency proceedings in India, US
Once India's most valuable start-up, BYJU'S is now facing bankruptcy proceedings in India and the US.
The company's troubles started after it defaulted on a payment of ₹158 crore to the Board of Control for Cricket in India (BCCI).
After the default, BCCI filed insolvency proceedings against BYJU'S parent firm Think & Learn Pvt Ltd at the NCLT.