Byju’s Founder Challenges $1 Billion U.S. Court Judgment Amid Financial Turmoil
Byju Raveendran, the founder of Indian ed-tech giant Byju’s, is contesting a U.S. bankruptcy court’s directive to pay over $1.07 billion. He denies any misconduct, accuses lenders of misleading the court, and plans to appeal the ruling, which marks a significant downturn for a once-celebrated figure in India’s startup ecosystem.
The Delaware bankruptcy judge issued a default judgment after determining that Raveendran had consistently disregarded court orders and provided evasive, incomplete responses concerning approximately $533 million that Byju’s U.S. subsidiary allegedly transferred in 2022 and failed to recover. The judge also highlighted issues with a separate limited-partnership stake, later valued at around $540.6 million. This ruling, dated November 20, arises from legal action by lenders seeking to reclaim funds linked to the $1.2 billion term loan they extended to the ed-tech startup in 2021.
In April, 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 denied any wrongdoing at the time and accused lenders of attempting a hostile takeover of the company. They later announced plans to pursue a $2.5 billion lawsuit against GLAS Trust and others in India and other jurisdictions, though no such filing has publicly surfaced. This was in addition to the complaint Byju’s filed in the New York Supreme Court challenging the acceleration of the term loan in 2023.
The court’s latest order followed a September 29 hearing on the default request, where the judge cited a prolonged pattern of noncompliance. The judge noted that Raveendran skipped hearings, missed extended deadlines, and ignored a prior contempt order imposing $10,000 in daily sanctions that remain unpaid.
U.S. Bankruptcy Judge Brendan Shannon stated that the relief granted in the case was extraordinary, adding that the circumstances of this case are, frankly, unique and unlike anything the undersigned has encountered before, thereby making such relief… richly warranted. The judge has given the parties seven days to respond to the ruling.
We consider that the U.S. Court erred in its judgment of this matter and will be filing the necessary appeals and other contestations related to this judgment and related orders, said J. Michael McNutt, senior litigation advisor at Lazareff Le Bars, representing Raveendran, in a prepared statement. The court, in our view, ignored relevant facts.
Raveendran’s legal counsel argued that the court issued the judgment without giving him an opportunity to present a defense and instead relied on an earlier contempt order. The counsel also contended that the ruling failed to acknowledge that GLAS Trust was aware the Alpha loan funds were not used for the personal benefit of Raveendran or other founders but rather for Think & Learn, the startup’s parent company.
The default judgment signifies a dramatic decline for Raveendran and his company, once India’s most valuable startup with a $22 billion valuation and backed by global investors including Tiger Global, the Chan Zuckerberg Initiative, and Prosus. The company is now entangled in lawsuits, facing funding shortages, mass layoffs, and a battle for control as lenders and creditors strive to recover their investments.
Raveendran previously challenged the Delaware court’s jurisdiction, but the judge rejected that argument in an earlier ruling, writing that Raveendran’s conduct that gives rise to the litigation here relates to his activities… in the United States fundraising and serving as a director, officer, or manager of a United States corporation.
Earlier this week, a filing in the Delaware bankruptcy case alleged that most of the $533 million missing from Byju’s U.S. unit, Alpha, was round-tripped back to Byju Raveendran and associates. In response, Raveendran denied the allegation, stating that the funds were not used for personal gain.
Meanwhile, in India, Byju’s is undergoing a court-supervised sale process after insolvency proceedings began last year, with early bidders including Manipal Education and Medical Group (MEMG) and Ronnie Screwvala’s UpGrad.
