Byju’s founder appeals US court order to pay more than $1 billion in bankruptcy case

Byju Raveendran, founder of Indian edtech giant Byju’s, has criticized a US bankruptcy court order that ordered him to pay more than $1.07 billion. He denies any wrongdoing, accuses the lenders of misleading the court, and vows to appeal the ruling that marks a dramatic downfall for the boy of India’s startup boom.

A Delaware bankruptcy judge issued a default judgment after finding that Raveendran repeatedly ignored court orders and provided “evasive and incomplete” answers regarding about $533 million that Byju’s US unit allegedly transferred in 2022 and never recovered. The judge also cited issues with a separate limited partnership interest later valued at $540.6 million. The ruling, dated November 20, stems from legal action by lenders seeking to recover funds associated with a $1.2 billion term loan they made to the ed-tech startup in 2021.

Earlier this year, in April, a group of US lenders led GLAS Trust File a lawsuit against Raveendran and his wife, Byju’s co-founder Divya Gokulnath, are in Delaware bankruptcy court over the loss of $533 million in loan proceeds. The pair denied any wrongdoing at the time and accused the lenders of attempting a hostile takeover of the company. They later said they intended to file a $2.5 billion lawsuit against GLAS Trust and others in India and other jurisdictions, although no such suit has emerged publicly. This was in addition to Byju’s complaint Filed in the New York Supreme Court Term Loan Acceleration Challenge in 2023.

The court’s latest order came after a September 29 hearing on the default order, where the judge cited a months-long pattern of non-compliance. The judge noted that Raveendran skipped hearings, missed extended deadlines, and ignored an earlier contempt order imposing $10,000 in daily penalties 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 have encountered before, making such relief…highly justified.” The judge gave the parties seven days to respond to the ruling.

“We hold that the U.S. court erred in its ruling on this matter and will file the necessary appeals and further appeals related to this ruling and related orders,” J. Michael McNutt, senior litigation counsel at Lazareff Le Bars, who is representing Raveendran, said in a prepared statement to TechCrunch. “The court, in our opinion, ignored the relevant facts.”

Raveendran’s legal counsel said the court had issued the ruling without giving him an opportunity to present a defense and instead relied on an earlier contempt order. The lawyer also said the ruling failed to acknowledge that GLAS Trust was aware that Alpha’s loan money was used not for the personal benefit of Raveendran or other founders, but for the benefit of Think & Learn, the startup’s parent company, the lawyer said.

Byju’s founders are preparing claims against GLAS Trust and others in multiple jurisdictions, and are expected to seek damages worth at least $2.5 billion, which, in the absence of a settlement, will be filed before the end of 2025, the lawyer said.

However, the default judgment marks a stunning downfall for Raveendran and his namesake company, which was once India’s most valuable startup with… Value: $22 billion It is backed by global investors including Tiger Global, the Chan Zuckerberg Initiative and Prosus. The company is now mired in lawsuits, funding droughts, mass layoffs, and a battle for control as lenders and creditors race to recover what they can.

Raveendran had previously challenged the Delaware court’s jurisdiction, but the judge rejected that argument in an earlier ruling, writing that Raveendran’s “conduct giving rise to the action here relates to his activities… raising funds in the United States and serving as a director, officer, or director of a U.S. corporation.”

Earlier this week, a filing in a Delaware bankruptcy case alleged that most of the $533 million missing from Byju’s US unit Alpha, It was a round trip To Byju Raveendran and his associates. In response, Raveendran denied the allegation, saying the money was not used for personal gain.

Meanwhile in India, Byju’s is undergoing a court-supervised sale next Insolvency proceedings It started last year, with early bidders including Manipal Educational and Medical Group (memg) and Ronnie Screwvala promoted.