US Bankruptcy Court Sanctions Byju’s Co-Founder Riju Ravindran for Concealing $533 Million

A US Bankruptcy Court has found Riju Ravindran, co-founder of Byju’s, in contempt of court for refusing to disclose or ascertain the location of $533 million in term loan proceeds. This ruling adds to the growing legal challenges faced by the edtech giant, which has been embroiled in multiple lawsuits from investors, vendors, and bondholders.

Judge John T. Dorsey of the United States Bankruptcy Court for the District of Delaware presided over the hearing on May 20, 2024. He imposed penalties on Ravindran after the latter failed to comply with court orders to reveal the whereabouts of the substantial loan proceeds transferred from BYJU’s Alpha, Inc. The specific amount for financial penalties will be determined in a future hearing.

In his ruling, Judge Dorsey prohibited any further transfers or use of the $533 million in loan proceeds. He also identified Byju Raveendran and Divya Gokulnath, co-founders of Byju’s, as working in concert with Ravindran. Additionally, the court ordered the arrest of William Morton, a hedge fund manager, for his persistent refusal to appear in court.

This decision follows a prolonged legal battle between Think & Learn Pvt Ltd, Byju’s parent company, and bondholders holding term loan B bonds. Byju’s Alpha, Inc., a US subsidiary, initially received the loan proceeds in 2021. The funds were later transferred to Camshaft Capital Fund, LP, a hedge fund managed by Morton. In a series of transfers, the loan proceeds were moved to Inspilearn LLC and then redeemed by an undisclosed entity in February 2024.

The court also sanctioned Ravindran by preventing him from arguing that the transfers were for legitimate purposes in ongoing fraudulent transfer litigation, effectively leaving him without a defense in those cases. Judge Dorsey expressed skepticism about Ravindran’s sworn declaration, which claimed he could not locate the funds. The judge concluded that Ravindran was either aware of the funds’ location or intentionally avoiding obtaining the information.

“Today’s ruling validates what we have known all along: Riju Ravindran, his brother and co-founder Byju Raveendran, and their conspirators fraudulently transferred $533 million in loan proceeds for no legitimate purpose other than to hide the money from the lenders to whom it is rightfully owed,” stated the steering committee of the ad hoc group of term loan lenders of Byju’s $1.2 billion term loan.

This ruling marks a significant development in the ongoing financial and legal turmoil surrounding Byju’s, once valued at $22 billion. The company continues to face scrutiny and legal action from multiple stakeholders.

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