US Court orders Byju Raveendran to pay $1.07B

A US bankruptcy court has ordered Byju Raveendran to pay $1.07 billion for refusing to share financial documents in the ongoing BYJU'S Alpha case.

BYJU’S Alpha is the Delaware entity that received the proceeds of a S1.2 billion term-loan for BYJU'S.

Judge Brendan Linehan Shannon issued a ruling on November 20 and held that Raveendran had shown a sustained pattern of non-cooperation that had already resulted in unpaid daily sanctions.

Raveendran’s legal team, in a statement, said the ruling was a “default judgment” issued on an expedited basis that prevented Raveendran from presenting a defence, and argued that the court had “erred in its judgment” and ignored relevant facts.

The court awarded damages of $533 million for aiding and abetting and a further $540.6 million for related claims, including conversion and breach of fiduciary duty.

The development relates to what the debtor (BYJU’S Alpha) and the lenders (the consortium of term-loan lenders now directing the estate’s actions) say happened to the “Alpha Funds, the $533 million which was allegedly moved out of BYJU’S Alpha in 2022.

According to the lenders, the funds were transferred to an investment vehicle called the Camshaft Fund and later moved again.

In response, Raveendran’s lawyers said the recent judgment is a consequence of GLAS Trust misleading the Delaware Courts.

GLAS Trust is a US-based regulated trust company that provides capital markets, corporate, and trustee services. The entity is representing a group of term-loan lenders who extended $1.2 billion to BYJU’S Alpha.

“The Delaware Court Judgement also does not address the fact that GLAS Trust has been aware that the monies from the Alpha loans were not used by Byju Raveendran or any Founder of BYJU’s for their personal gain but were used for the benefit of Think & Learn Private Limited (TLPL),” noted J Michael McNutt, Senior Litigation Advisor, Lazareff Le Bars Eurl, in the statement.

The judge said the record showed a consistent refusal by Raveendran to engage in discovery. 

The opinion quoted the plaintiffs as saying that “Raveendran has no problem filing declarations and seeking favourable rulings when it may help his legal defence, but flatly refuses to engage in discovery when doing so could undermine his one sided, self serving assertions.” The judge found that lesser sanctions had proved ineffective.

The court relied on evidence in the record including a declaration from the debtor’s court appointed director (the independent director overseeing BYJU’S Alpha in bankruptcy) which stated there was “no evidence of the Debtor having received any return accruing from its enormous purported investment in Camshaft Fund.”

That material, combined with earlier findings in a related adversary proceeding, was deemed sufficient to calculate monetary relief without a separate damages hearing.

In its conclusion, the court acknowledged the severity of the remedy but defended its necessity. It stated that “the circumstances of this case are, frankly, unique and unlike anything the undersigned has encountered before, thereby making such relief in this case richly warranted.”

The ruling also directs Raveendran to provide a full accounting of the Alpha Funds (the $533 million transferred out of BYJU’S Alpha in 2022) and requires the parties to submit a proposed judgment order within seven days.

The ruling follows earlier findings that Raveendran had been held in contempt and hit with a $10,000 per day sanction that remained unpaid.

Earlier this week, a separate Delaware filing offered a detailed account of how the $533 million was allegedly moved, drawing on a sworn declaration from Oliver Chapman, chief executive of UK based OCI Limited.

That filing asserts that the funds were effectively routed back to entities linked to Raveendran and that earlier explanations about hardware and advertising procurement were inconsistent with the documented money trail, a claim the BYJU’S founders “categorically and unequivocally” reject.

The founders said Chapman’s testimony was incomplete and argued that no part of the funds had been diverted for personal benefit, while also noting that they would present further evidence to rebut the allegations.

“Claims are being prepared against Glas Trust and others in other jurisdictions. Such claims to be issued by all or some of BYJU’s Founders are expected to demand monetary damages of not less than $2.5 billion and absent a settlement are expected to be filed with the relevant Court prior to the end of 2025,” McNutt remarked.

Raveendran’s lawyers also stated that GLAS and associated funds had “damaged the good reputation” of the founders and acted as “vulture funds”. 

Insolvency and appellate forums continue to play a central role in the wider dispute. Cases have moved between the National Company Law Tribunal (NCLT), the National Company Law Appellate Tribunal, and the Supreme Court as stakeholders contest control of the company, creditor rights and the status of previous settlements.

Fresh filings by co-founder Riju Ravindran at the NCLT have added new layers of complexity. His applications dispute aspects of the lenders’ enforcement steps, question the handling of specific financing arrangements and allege regulatory lapses in the lenders’ approach.

Meanwhile, the NCLT supervised asset sale process has drawn strong interest from potential buyers. Edtech firm upGrad and the Manipal Group have submitted expressions of interest for parts of BYJU’S assets.

(This article was updated with a statement issued on November 22 by Byju Raveendran’s legal team.)