Byju’s Founder Appeals $1 Billion U.S. Court Ruling
▼ Summary
– Byju Raveendran is contesting a U.S. bankruptcy court order to pay over $1.07 billion, denying wrongdoing and planning to appeal the ruling.
– The Delaware judge issued a default judgment due to Raveendran’s repeated noncompliance with court orders and incomplete responses about missing funds.
– Lenders sued Raveendran and his wife over $533 million in unaccounted loan proceeds, which the couple claims was not used for personal gain but for the parent company.
– Raveendran’s legal counsel argues the court ignored relevant facts and issued the judgment without allowing a proper defense, while the founders plan a $2.5 billion lawsuit against lenders.
– The case represents a dramatic fall for Byju’s, once India’s most valuable startup, now facing insolvency proceedings and a court-supervised sale in India.
Byju Raveendran, the founder of the prominent Indian education technology firm Byju’s, is contesting a U.S. bankruptcy court decision that orders him to pay over $1.07 billion. He has publicly criticized the ruling, insisting he committed no wrongdoing and alleging that lenders provided misleading information to the court. Raveendran has pledged to appeal, a move that underscores a significant downturn for an entrepreneur once celebrated as a symbol of India’s thriving startup scene.
A Delaware bankruptcy judge issued a default judgment after determining that Raveendran repeatedly disregarded court directives. The judge pointed to “evasive, incomplete” responses concerning approximately $533 million that Byju’s U.S. division reportedly transferred in 2022 and never retrieved. The decision, dated November 20, also referenced complications with a separate limited-partnership interest valued at around $540.6 million. This legal action originated from lenders attempting to recover money tied to a $1.2 billion term loan provided to the ed-tech company in 2021.
Earlier in April, a consortium of U.S. lenders headed by GLAS Trust initiated a lawsuit against Raveendran and his wife, Divya Gokulnath, who co-founded Byju’s. The lawsuit centered on the unaccounted $533 million in loan funds. At that time, the couple refuted any misconduct and charged the lenders with trying to orchestrate a hostile takeover of their business. They subsequently announced intentions to file a $2.5 billion lawsuit against GLAS Trust and other parties in India and additional legal jurisdictions, although no such case has yet been publicly recorded. This was separate from a complaint Byju’s lodged in the New York Supreme Court disputing the acceleration of the term loan in 2023.
The court’s recent order followed a September 29 hearing on the default request, during which the judge highlighted a prolonged history of noncompliance. The judge observed that Raveendran failed to attend hearings, missed extended deadlines, and disregarded a prior contempt order that imposed daily $10,000 fines, which remain outstanding.
U.S. Bankruptcy Judge Brendan Shannon called the relief granted in the case “extraordinary,” noting that the circumstances were “unique and unlike anything [he] has encountered before.” He gave the parties seven days to file their responses.
Michael McNutt, senior litigation advisor at Lazareff Le Bars and counsel to Raveendran, told TechCrunch that his team intends to challenge the ruling. He argued that the court “erred in its judgment,” adding that they “will be filing the necessary appeals and other contestations.” According to McNutt, the decision overlooked key details.
Raveendran’s lawyers said the judgment was issued without giving him the opportunity to mount a defense, relying instead on an earlier contempt order. They also claimed the ruling failed to acknowledge that GLAS Trust was aware the Alpha loan funds were directed to Think & Learn, the parent company of Byju’s, rather than to Raveendran or other founders for personal gain.
The legal team said the founders are preparing claims against GLAS Trust and additional entities in several jurisdictions. Those claims are expected to pursue at least $2.5 billion in damages if no settlement is reached, with filings anticipated before the end of 2025.
This default judgment marks a sharp setback for Raveendran and the company that once led India’s startup scene. Byju’s previously held a $22 billion valuation and counted major global investors, including Tiger Global, the Chan Zuckerberg Initiative, and Prosus, among its backers. Now, the company is battling funding shortages, large-scale layoffs, mounting lawsuits, and a power struggle as creditors push to recover their losses.
Raveendran had earlier challenged the Delaware court’s jurisdiction, an argument the judge rejected. Shannon wrote that the conduct at issue stemmed from Raveendran’s activities in the United States, including fundraising and serving in leadership roles at a U.S.-based entity.
A filing this week in the Delaware bankruptcy case claimed that most of the missing $533 million from Byju’s U.S. unit, Alpha, was “round-tripped back to Byju Raveendran and associates.” Raveendran disputed this, insisting the funds were not used for personal benefit.
Meanwhile, in India, Byju’s is progressing through a court-monitored sale after entering insolvency proceedings last year. Early bidders include Manipal Education and Medical Group (MEMG) and Ronnie Screwvala’s UpGrad.
(Source: TechCrunch)
