Byju’s Founder Fights Back Against $1B Bankruptcy Ruling in U.S. Court

Byju Raveendran Denies Wrongdoing in $1.07 Billion Bankruptcy Order

Byju Raveendran, the embattled founder of Indian ed-tech giant Byju’s, has strongly criticized a U.S. bankruptcy court’s directive demanding him to pay over $1.07 billion. He maintains his innocence, alleging that lenders misled the court and has vowed to challenge the ruling. This marks a significant downfall for a once-prominent figure in India’s startup landscape.

The Delaware bankruptcy judge issued a default judgment after discovering that Raveendran had continuously disregarded court orders and provided evasive responses regarding approximately $533 million that Byju’s U.S. unit reportedly transferred in 2022 and never retrieved. The judge also highlighted concerns with a separate limited-partnership stake valued at around $540.6 million. This ruling, dated November 20, is a result of legal action by lenders aiming to recover funds linked to the $1.2 billion term loan they granted to the ed-tech startup in 2021.

Earlier this year, a group of U.S. lenders, led by GLAS Trust, sued Raveendran and his wife, Byju’s co-founder Divya Gokulnath, in the Delaware bankruptcy court over the missing $533 million in loan proceeds. The couple refuted any wrongdoing and accused lenders of trying to take over the company. They also mentioned plans to file a $2.5 billion lawsuit against GLAS Trust and others, although no such filing has been made public yet. Additionally, Byju’s lodged a complaint in the New York Supreme Court contesting the acceleration of the term loan in 2023.

The recent court order followed a hearing on September 29 where the judge highlighted a pattern of noncompliance over several months. Raveendran skipped hearings, missed deadlines, and disregarded a previous contempt order imposing $10,000 in daily penalties that remain unpaid.

U.S. Bankruptcy Judge Brendan Shannon described the relief granted in the case as “extraordinary,” emphasizing the unique nature of the circumstances. The judge has given the involved parties seven days to respond to the ruling.

“We believe that the U.S. Court erred in its handling of this matter and will be lodging appeals and other challenges related to this judgment and associated orders,” stated J. Michael McNutt, senior litigation advisor at Lazareff Le Bars, representing Raveendran. “In our opinion, the court overlooked pertinent facts.”

Raveendran’s legal team argued that the court issued the judgment without allowing him to present a defense, relying instead on a previous contempt order. They also contended that the ruling failed to acknowledge that GLAS Trust was aware that the Alpha loan funds were utilized for Think & Learn, the startup’s parent company, and not for personal gain.

The legal team mentioned that Byju’s founders are preparing claims against GLAS Trust and others in multiple jurisdictions, seeking at least $2.5 billion in damages, with plans to file before the end of 2025 if no settlement is reached.

Despite the denial of any wrongdoing by Raveendran, the default judgment signifies a significant downfall for him and his company, once valued at $22 billion and supported by prominent global investors. Byju’s is now entangled in legal battles, financial challenges, layoffs, and a struggle for control as creditors rush to recover debts.

Raveendran had previously disputed the jurisdiction of the Delaware court, but the judge dismissed this argument, citing his involvement in U.S. fundraising and corporate roles as reasons for the litigation falling under U.S. jurisdiction.

Recent filings in the Delaware bankruptcy case alleged that most of the missing $533 million from Byju’s U.S. unit, Alpha, was funneled back to Byju Raveendran and associates. Raveendran refuted these claims, asserting that the funds were not misused for personal purposes.

Meanwhile, in India, Byju’s is undergoing a court-supervised sale process following insolvency proceedings initiated last year. Potential buyers include Manipal Education and Medical Group (MEMG) and Ronnie Screwvala’s UpGrad.