US bankruptcy court says BYJU’S, Riju Ravindran, Camshaft defrauded lenders
The court also confirmed that Riju Ravindran violated his fiduciary duties as a director of BYJU’S Alpha.
A US bankruptcy court has found that Indian edtech firm BYJU'S' parent Think & Learn Pvt Ltd, Riju Ravindran—the brother of its founder Byju Raveendran, and others defrauded US-based lenders to BYJU’S Alpha, Inc.
Judge John TDorsey of the US Bankruptcy Court for the District of Delaware granted a summary judgment in favour of BYJU’s Alpha while also holding Camshaft Capital Fund and its affiliates responsible for orchestrating and executing an unlawful scheme that defrauded the Lenders.
The steering committee of the ad hoc group of lenders of the $1.5-billion Term Loan B said in a press release that the court is expected to award damages at a later date.
The court confirmed that the multiple transfers of funds from BYJU’s Alpha constituted actual fraudulent transfers and conversions (i.e., theft). The court also confirmed that Riju Ravindran "violated his fiduciary duties" as a director of BYJU’s Alpha.
“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. This is a significant step forward in the Lenders’ efforts to recover the stolen funds that are rightfully owed to them,” the lenders said.
The lenders had alleged that a few months after signing the credit agreement, the US unit of BYJU’S under Riju Ravindran and affiliates missed certain loan covenants during March-April 2022.
Within weeks of the defaults, Riju Ravindran and others transferred $533 million through a series of transfers. The lenders alleged that BYJU’S, Riju Ravindran, and others concealed the whereabouts of the ‘Alpha Funds’ on multiple occasions and failed to furnish financial statements that would have revealed where the ‘Alpha Funds’ were transferred.
Lenders led by Glas Trust had taken over BYJU’s Alpha Inc, alleging fraud by Riju Ravindran and others.
The CapTable reported earlier this month that Camshaft’s questionable credentials were merely the tip of the $533 million iceberg.
BYJU’s, which was once touted as India’s highest-valued startup, is facing bankruptcy proceedings in India and the US. The edtech firm’s problems began when it defaulted on a payment of Rs 158 crore to the Board of Control for Cricket in India (BCCI).
The cricketing body dragged the company to the NCLT, which initiated insolvency proceedings against BYJU’S parent company Think & Learn Pvt Ltd. Following this, BYJU’S settled with BCCI, which withdrew its petition. But the case reached the NCLAT which directed the NCLT to decide on the settlement between the edtech firm and BCCI.
(The story was updated with additional details.)
Edited by Kanishk Singh