US Court Reverses $1 Billion Damages Order Against Byju’s Founder: What Happens Next
The court has now clarified that damages had not been formally determined and has ordered a new phase of proceedings to begin in early January 2026 to assess any potential damages.
A US bankruptcy court has reversed a $1 billion damages ruling against Byju Raveendran, founder of ed-tech firm Byju’s, offering temporary relief to the embattled entrepreneur as one of the most closely watched corporate legal battles involving an Indian startup continues to unfold.
The development comes after the Delaware Bankruptcy Court reconsidered its earlier default judgement from November, following fresh submissions by Raveendran, reported PTI.
The court has now clarified that damages had not been formally determined and has ordered a new phase of proceedings to begin in early January 2026 to assess any potential damages.
What Was The Original Ruling About?
Last month, the Delaware Court ordered Raveendran to pay more than $1 billion in a default ruling. The court said the former corporate star had failed to cooperate with legal efforts to trace nearly half the proceeds of a $1.2 billion term loan raised in the US in 2021.
Raveendran contested the order, arguing that the ruling was issued without granting him the 30 days he had requested to appoint a US attorney to represent him. He publicly stated his intention to challenge the decision, calling the process procedurally unfair.
The latest order effectively pauses the damages aspect of the case, with the court agreeing that a separate determination is required before any liability can be fixed.
Fresh Submissions Lead To Reversal
According to a statement issued by the founders of Think and Learn Pvt Ltd, the parent company of Byju’s, the court reversed the $1 billion judgement after considering a motion filed by Raveendran to correct the November 20, 2025 judgement.
“The Court agreed that damages had not been determined and ordered a new phase to commence in early January 2026 to determine any damages related to claims against Byju Raveendran,” the statement said.
This means that, as of now, Raveendran has not been held liable to pay any damages.
Allegations By Creditors And Founders’ Defence
Earlier this year, a group of Byju’s creditors led by GLAS Trust accused Raveendran, his wife and co-founder Divya Gokulnath, and another individual, Anita Kishore, of orchestrating the diversion of $533 million from the loan proceeds.
The founders have repeatedly rejected these allegations, describing them as “completely baseless and untrue”. They have maintained that the entire loan amount was invested back into Think and Learn Pvt Ltd, primarily to fund acquisitions worth $3 billion completed during the same period.
The statement released on Wednesday accused GLAS Trust and the lenders of withholding or misrepresenting information, alleging that such actions misled courts and the public, contributed to the collapse of the business, led to the loss of around 85,000 jobs, affected nearly 250 million students, and destroyed tens of billions of dollars in enterprise value.
Legal Strategy And Next Steps
Raveendran’s litigation adviser, Michael McNutt, said the entrepreneur has not been found liable to pay “a single dollar” in damages to GLAS Trust Co LLC.
“During the damages proceedings starting January 2026, we intend to demonstrate to the Court that not only have the Plaintiffs suffered no damage whatsoever due to actions of Byju Raveendran, but also that the Plaintiffs have intentionally misled the Court,” McNutt said.
He added that the defence would also seek to show that the plaintiffs attempted to influence courts in India and elsewhere by “harassing and damaging” Raveendran, Divya Gokulnath, and Riju Ravindran.
McNutt further stated that the defendants reserve the right to seek sanctions against GLAS Trust’s counsel and confirmed plans to file a $2.5 billion lawsuit before the end of the year.
Evidence And Parallel Proceedings
The statement said Raveendran will present evidence before US courts showing that the $533 million in question, referred to as Alpha Funds, was invested into Think and Learn in compliance with Indian laws and not diverted for personal use.
It also claimed that GLAS Trust and the Resolution Professional currently managing Byju’s had full visibility into how the funds were deployed. Publicly available financial records, the founders said, show that Raveendran and entities controlled by him invested over $475 million by purchasing shares in Think and Learn during the same period.
This evidence will form part of an appeal against the amended judgement dated December 8, and will also be shared with Indian courts in the coming weeks.
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