US Judge Says Byju’s, Riju Ravindran Defrauded Lenders And Hid $533 Million: Report

US Bankruptcy Judge, John Dorsey, said that the tech firm fraudulently transferred at least a part of the money to a small hedge fund based in Miami to keep it away from the lenders.

Lenders have also been trying to get their dues through the Indian bankruptcy, however it remains unclear how much value is left in the Byju’s enterprise.

Source : Byju's

A US court ruling on Friday found a senior official of Byju’s in violation of their fiduciary duty to lenders. The ruling said that a top official of the Indian start-up firm breached his duty to lenders to wrongly hiding $533 million from them. The ruling marked a win for creditors who have been struggling to collect on the defaulted loan of $1.2 billion.

US Bankruptcy Judge, John Dorsey, said that the tech firm fraudulently transferred at least a part of the money to a small hedge fund based in Miami to keep it away from the lenders, reported Bloomberg. The ruling also said that lenders can now collect financial damages award from the company, while the amount would be determined in a separate hearing.

Byju's Bankruptcy Struggle 

This decision also marks another setback for Byju’s as the company tries to navigate bankruptcy proceedings in both the US and India. Lenders in the US are fighting to liquidate the domestic education software companies acquired by Byju’s for $820 million some years ago and recoup payments.

Citing an emailed statement from a group of lenders who have been at the front of the fight, the report said, “This is a significant step forward in the lenders’ efforts to recover the stolen funds that are rightfully owed to them.”

Notably, lenders have also been trying to get their dues through the Indian bankruptcy, however it remains unclear how much value is left in the Byju’s enterprise. Earlier this year, a court appointed the lenders’ agent, Glas Trust Co, to an influential creditors committee in the insolvency proceedings of Byju’s. This marked a major victory for the lenders.

The court also found that a court-approved restructuring official wrongly threw Glas Trust from the committee last year and asked for an investigation into the said official.